Today business transformation is driven by opportunities being created by the digital economy. Companies, especially PE firms, must shift their top-down thinking to a value-driven approach across all technology segments and the investment lifecycle to get the most business value.
As Clément Mengue explains to Financier Worldwide, “Historically, most PE firms created value in portfolio companies by focusing on predominantly two lever clusters: firstly, cost cutting and creating operational efficiencies, and secondly, revenue upliftment through sales and marketing optimization, business and product innovation, and geographic and vertical expansion. Today, digital transformation is the latest value creation tool that enables a traditional business, typically a non-technology company, to transform into a data-driven one by leveraging de-risked technologies, such as data analytics, artificial intelligence (AI), and the internet of things (IoT), among others.”
All organizations, including non-technology firms, have many levers that can be pulled to create value fast. Today’s Technology stack provides numerous ways to drive value post-acquisition, from enabling growth and timely decision-making to reducing costs and mitigating risks.
It is important to have a technology partner with the in-depth knowledge to review the risks and opportunities through the growth lens at the due diligence cycle and identify technology-driven value creation opportunities so that the PE firm can better understand investment potential and which lever to pull to maximize growth.
Top value creation options through technology:
- Risks Mitigation
- Cost optimization
- Operational Improvements Through Automation
- Growth Enablement
- Increased Efficiencies
- On-time Business Insights
- Business Compliance
- Process Standardization
- Security
Bigger PE firms can internally manage the technology enablement role to assist their portfolio companies, but smaller PE firms do not have to build this capability internally; they can have a digital operating partner. The digital operating partner identifies high-impact digital initiatives, plans them with the investment team and portfolio company management, and then drives the execution.
The above-mentioned vital elements are meant as information and require a more profound understanding of the company and the industry. However, if you would like a more detailed overview, do not hesitate to reach out to me at rizwan.khan@fuzzitech.com.
I have years of experience building Technology and providing Technology Due Diligence as a CTO, and I am available for fruitful discussions.
Fuzzitech expertise and experience in Technology Advisory and Due Diligence can help you successfully discover the truth from the perceived value of technology as a vital part of the transaction. Hence, you have the clarity to know how and where to move forward quickly.
