Why Private Equity Firms Need Analytics

Why Private Equity Firms Need Analytics

2 Min Reads

Emagia Staff

M&A in the United States has finally reached pre-recession levels and is identified as the primary growth strategy in 2015. Deal value in the first three quarters of 2014 reached almost $1 trillion and the over 5,000 deals announced during the period are the highest on record according to a survey conducted by KPMG LLP and the research practice unit of SourceMedia.

Whether you have acquired a company to strengthen and sell it or with the hope of one day taking it public, analytics should be a pivotal component of your investment strategy. Business Week USA states that 40-60% of the mergers and acquisitions initiated in 2014 will ultimately fail. Integrating your acquisition rapidly and making immediate process improvements are the keys to your success. There is a role for analytics in just about every component of your newly acquired business.

Mining the data for cash and working capital

Quite simply put, the most straightforward approach to improving cash and working capital is to start with your accounts receivable. Analytics provides you with insights into how customers are paying, where your risk areas may lie and how productive your teams are that are collecting the money. In this case knowledge is power.

A business analytics solution like Emagia allows you to make the rapid, data-driven decisions that ultimately lead to a seamless incorporation of your new enterprise. A large number of mergers fail each year because too much time is spent on the integration and not enough time is spent on maintaining and building upon the current customer base. Analytics provides a quick insight into all of your financial operations and your customer payment behaviors. Business Intelligence solutions today allow you to quickly consolidate information from disparate systems allowing for a push button snapshot of what is happening. Prepackaged, cloud-based business intelligence solutions like Emagia can be implemented in a matter of weeks. Keep your momentum while assessing the areas of the business that require your immediate focus.

Dashboards to keep everyone on the same KPIs

The bringing together of people and teams are often viewed by management as the biggest headache in the M&A process. People don’t understand their place in the new organization, aren’t familiar with the culture and this can lead to lower productivity. Analytics and dashboards are a good way to not only evaluate staffing, products and processes, but allow you to quickly set standards and metrics across the entire new organization. Stop the “we always did it this way” chatter and give the new team a clear cut focus and direction that will make everyone successful.

Getting the most from short-term fixes

The first few months are all about determining short-terms resolutions and developing long-term process improvements. Utilize the analytics tools to evaluate what you have, optimize synergies and model the desired outcomes of the future.

Why hassle with multi-system data integrations, less than optimal staff output and the constant need to generate cash; simplify your life and your M&A integrations by harnessing the power of data analytics to gain necessary insights and information to drive the best value.


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