Operating Partner & Portfolio Operations
In the realms of M&A and Private Equity, our organisation, occupying the role of Operating Partner or Portfolio Operations, plays an essential role in linking deal teams with portfolio management. Our primary focus lies in executing the value creation plan, enhancing profitability, optimizing working capital, integrating financial systems, and maintaining regulatory compliance throughout the acquired entity.
Pre-Deal: Due Diligence & Value Planning
- Quality of Earnings (QoE) Analysis: Examine the financial statements of the target company to adjust EBITDA, uncover hidden liabilities, and distinguish between recurring and nonrecurring revenues.
- Synergy Validation: Evaluate revenue and cost synergy models (like procurement savings and operational scale) to verify their viability.
- Working Capital Assessment: Review historical cash flows and inventory cycles to establish the normalized working capital required by the closing of the deal.
Post-Deal: Integration & Value Creation Execution
- Financial Infrastructure Integration: Align accounting policies, charts of accounts, and financial reporting systems between the acquiring and target firms (such as moving to unified ERPs).
- Purchase Price Allocation (PPA): Assign the acquisition's purchase price to various tangible and intangible assets (like goodwill, patents, and customer relationships) in accordance with IFRS or GAAP guidelines.
- Readiness & Carveout Support: For carveout transactions, develop standalone cost models to ensure seamless daily operations within the newly acquired business unit.
- Working Capital Optimization: Implement real-time enhancements in Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), and inventory management to generate additional cash flow.
- Cost Transformation: Identify inefficiencies in overhead, manufacturing, and supply chains to increase profit margins and elevate EBITDA.
Continuous Monitoring & Exit Readiness
- Performance Dashboards: Create and manage Key Performance Indicators (KPIs) and operational dashboards to keep a constant check on financial performance.
- Risk Management: Regularly evaluate operational, market, and compliance risks while conducting stress tests on financial forecasts.
- Exit Preparation: Ready the portfolio company for a successful exit (either through sale or an IPO) by ensuring clean financial documentation, strong corporate governance, and a clear value creation story.
For a deeper understanding of how these roles integrate into the broader context of private equity and consulting, please feel free to contact us
