Consulting Services for Private Equity or Venture Capital Acquisitions and Investments Part 2
By Bob Betke
As I discussed in Part 1 of this article, it is important that you find a company that suits your needs. A company that provides due diligence services in the multichannel retail arena will help you investigate the feasibility of, or provide support for, mergers, acquisitions, and/or investment opportunities. My firm, F. Curtis Barry & Company, helps potential investors conduct multichannel acquisition due diligence evaluations of the operational areas related to warehouses and contact centers and their related facilities, systems, staffing and processes.
Improving Portfolio Companies: Post-acquisition Due Diligence
Once an investment has been made, issues similar to those covered in the Pre-acquisition Due Diligence stage need to be addressed. Unless the investor intends to keep the business running just as it did before the investment, it will be necessary to develop plans for change and improvement. F. Curtis Barry & Company helps clients maximize the value of their portfolio companies by conducting an operational audit that will help them discover potential problems and implement improvements.
The first step in this audit process is to conduct a thorough and methodical evaluation of all of the operating areas within the business to develop a list of potential improvements. This list should then be defined to include the cost, savings, risks, timelines, and any other related factors that can be used to prioritize potential changes. This “Discover and Fix It†list, which should focus on reducing costs and improving service levels, can be built on work done during Pre-acquisition Due Diligence or as an independent step. If it is an independent step, all of the areas covered in the Pre-acquisition assessment should be looked into again as the list of prioritized potential improvements is developed.
Investors should develop plans that reflect the needs for future growth with a 3–5 year horizon. Decisions about which ideas to implement should be based on justifications using both current and future sales volumes. It will most likely not be possible to do everything at once, so pick and choose your battles wisely. Maximizing the current operation should come before investing in change. Basing justifications for investment on a sub-optimized current operation is counterproductive. The best use of the time available after an investment is rather to make the most of what you have, look for the “low-hanging fruit,†and concentrate on getting the basics right. For instance, if an investment involves putting two or more companies together, one obvious place to look for improvement is in the elimination or reduction of duplicated efforts.
Implementation Plan
A final step in the process is to develop a transition or implementation plan that details the steps that are required for implementation, the person accountable for completing the plan, and a timeline. Without such a plan, all of the prior work can be wasted. It is also vital to provide a single accountable resource to project manage the implementation.
With the future financial well being of those involved in the investment process, it is imperative that you do all of the homework required to make a wise decision. After the investment, it is equally important to maximize the return on the investment by discovering potential improvements and implementing them.
About the Author
Bob Betke is a vice president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in assisting multichannel businesses with pre- and post-acquisition due diligence. Learn more online at: http://www.fcbco.com
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