Value Creation Offerings|
Getting The Value Out Of Post Close Assessments
We used to make post-close 30-day and 100-day plans, but with the way, technology is driving companies, the reality is it's much more extended than today. It's more or less, a plan for the entire holding period and there is a likelihood of pivoting in the course of the execution. Nevertheless, 100-day plans are critical for agreeing on the operating model, governance, and aligning on the north star direction.
However, the devil is in the details and it is important for the diligence and post-close assessments/diagnostics to provide the critical backlog and quantify the impact of the value creation levers. This assists with the decisions making and clarity for the return on investment that goes hand in hand with the 100-day plans. It's essentially the tool needed to put in place what actions need to be taken.
Technology due diligence should provide a high-level backlog on mitigating risks and eliminating surprises - this is a great starting point. Post-close assessments conducted immediately post-close are important to provide the next layer of depth down and provide input for the 100-day plan. The goal is ultimately to figure out how to meet and exceed the investment thesis.
At RingStone, the value creation assessment takes into consideration 3 key-value creation pivots and provides a backlog that is centered around value and cost with a goal to inform the 100-day plan for better decision-making.
1. Revenue Growth Potential
The focus emphasizes the ability to create customer value such as adding new features or services in order to make the product more sticky. The value is a measure of the ability to extend to new markets and grow the existing market share. Regardless of whether the backlog item relates to the software architecture, IT infrastructure setup, process, or team structure, each line item measures the impact on revenue growth enablers.
2. Margin and EBITDA Potential
The second pivot is around efficiency, productivity, and the ability to do more with less. These metrics center around creating better quality products and services. It also quantifies how to measure the value of the ability to go to improve time to revenue. Going to market earlier provides the ability to receive the necessary feedback, pivot, and limit waste. Finally, the ability to optimize cost whether, through better tools, processes, or organizational design benefits the margins.
3. Exit Multiple Potential
Exit multiple expansions can be tricky to plan earlier in the game and with market shifts, but technology plays an important role in the brand and trust positioning. For example, the RingStone assessments and diligence track value-add through the ability to attract, hire and retain talent, reducing the compliance and security gaps, customer satisfaction excellence, and the ability for technology to be flexible in accommodating pivoting as insurance against market shifts.