Pre-IPO Transformation of Corporate Finance Function
See how BCG supported a large industrial goods conglomerate to transform and streamline its corporate finance function.
PreipoCo is a diversified industrial goods company operating in multiple businesses and regions.
After a period of acquisitions and divestitures, the company was facing the challenge of integrating the various businesses and creating a lean and efficient corporate center. A traditional organizational setup was not able to cope with the rising demands. In particular, the divisional level hindered and complicated processes between the corporate center and the business units.
Our client was preparing for an IPO and aspired to feature best-in-class efficiency in its central functions, especially the finance function. To achieve a significant reduction in process time and costs, the client approached BCG to reorganize the corporate center, audit and restructure its processes, and transfer a substantial share of activities into a shared service center.
The project scope included a major reorganization of all controlling related processes, with the primary aim of improving the transparency for the corporate center, while at the same time creating a more cost-efficient setup.
To achieve these goals, BCG addressed multiple value levers. The divisional level was eliminated, and its tasks were allocated to the corporate center and the business units. Other contributing levers were right-sizing departments, eliminating redundant activities, defining and documenting responsibilities in unclear processes, and consolidating and harmonizing metrics.
Assessing these levers indicated the possibility of substantial quality and efficiency improvements, especially via modularization and standardization of the reporting landscape. It was estimated that this lever would result in significant reduction of reports, while a redesign of the integrated planning process promised significant resource relief by shortening the duration by approximately four months.
The improvement of controlling processes focused on four steps that addressed the identified efficiency levers.
Define standardized performance metrics:
Enhance the strategy and planning process:
Streamline business-unit and group reporting:
Implement business performance meetings:
Overall reorganization of the corporate center led to a reduction in the number of hierarchies. Together with the streamlining of processes and a reduction in reporting quantity by 40 percent, this created an efficient corporate center—reducing costs by 25 percent, while also improving the service level to the board and business units.
Major cost-reducing effects of the project included
fewer, but more relevant, metrics
a shorter strategy and planning process
a reduced number of reports
standardized reporting formats
regular business performance meetings
implementation of escalation guidelines