Overall, validating data related to operational efficiency requires a systematic approach to collecting and analyzing data, as well as an understanding of the key drivers of efficiency in the specific industry and company. By validating data in this way, companies can identify areas for improvement and implement targeted strategies to increase their efficiency and profitability. This information is valuable to have for a buyer of an organization and invaluable to help steer opportunities for improvement post-close.
Having tools to validate data is important. Equally important is having a deep talent bench with experience in specific verticals who know how to uncover improvement opportunities, as illustrated by two of our recent engagements:
DISCOVERING AN UNDERESTIMATED CAPACITY
The ProAction Group was retained by the buyer to conduct an operational diligence on a co-manufacturing company. The CIM stated the company was operating at 80% capacity, with plans to expand the facility and add additional equipment. Upon our analysis of the operational data and observations at the facility, we calculated that operating capacity was closer to 40%! This discovery dramatically influenced our client’s CAPEX plans and shifted their margin projections due to overhead absorption and labor utilization improvements.
WE’VE GOT A 2-FER!
Our client was challenged to keep up with their 10X growth in SKU’s. Although inventory was growing, they were also missing out on sales opportunities. As a result of our DeepView Turn & Earn analysis, we were able to identify and segment their product demand patterns. The data and analysis revealed they had two businesses under one roof – a low-mix/high-volume business, as well as a high-mix/low-volume business. Continuing to operate the company as a one-size fits all process model was the culprit. Our recommendation to run each of these two businesses differently resulted in dramatic reductions to inventory, elimation of lost sales and an immediate increase in EBITDA of 18%.
We can assist you in identifying and planning for operational efficiencies, often leading to big gains.
The ProAction Group provides industry leading transparency and clarity around data generation and validation where data may not be available.
Our operational diligences highlight potential negative surprises and provide post-close value creation strategies, with suggested implementation plans, management guidance, and interim leadership as needed. We bring the plan to eliminate, manage or mitigate the risk.
We help you to say yes to the deal, with your eyes open.
We eliminate the ability for secrets to exist, as we are taking the time to truly understand operationally what is going on. All this helps our PE clients and management teams in a smooth transition post-close.