In our experience, the first 100 days after a private equity firm takes ownership of an asset are critical to long-term value creation. During those early months, private equity firms can follow several practical suggestions to kick-start growth.
Over the years, we’ve developed and field-tested methodologies and tools—customized to the private equity sector—that can support operational improvement and growth acceleration at portfolio companies.
A 100-day plan outlines the most urgent value-creation steps that firms can take as soon as the deal closes. The objective is to identify key value drivers and create a roadmap to make improvements in those areas.
Five Primary 100-Day Program Objectives
Define a clear strategic direction for the company. Value creation always comes back to strategy. Where, exactly, does the firm want to take its newly acquired business, and how does it plan to get there? Answering these questions helps focus everyone’s vision, from the private equity firm executives and its staff, to the CEO and employees of the portfolio company.
Build an organization that will help realize the defined strategy. The only way the strategy can be implemented properly is if the right people, structures, and processes are in place. Everyone should be working toward the same goal.
Identify a series of initiatives for short-term cash generation. Growing the business may be the long-term goal, but how do you fund the journey? While you don’t want to sacrifice long-term opportunity for short-term gains, you do want to start making a return on investment sooner rather than later. Carefully assess the business, and identify places where it can achieve some immediate returns.
Identify and prioritize opportunities to improve operational performance. What are the value creation drivers that will help the company grow in the medium-term? Perhaps it’s improving the supply chain, greasing the R&D pipeline, or overhauling sales and marketing programs.
Build a roadmap to ensure successful implementation. None of this can be done without a detailed roadmap that everyone can follow. Private equity firms should clearly define measures and targets so that the portfolio firm’s CEO, staff, and others have something concrete toward which to work.
For successful deals in consumer goods, private equity firms must begin with a differentiated vision for each individual asset. BCG’s Tom Lutz shares the best practices of market winners.
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Principal Investors & Private Equity