Our services
Our approach
In almost every operating business in every industry, the biggest driver of Enterprise Value is the operations technology ecosystem – not the service or product itself, but how the business delivers that service or product. Across the entire Lead To Cash journey, from outward-facing marketing and sales systems, through the internal operations systems for provisioning and delivery of the service, to the integrated finance and supplier systems that ultimately drive Free Cash Flow, it is the use of technology and AI-driven insights and actions that drives revenues, costs and customer loyalty.
The Lead to Cash Journey
The L2C journey is the full set of operational processes that starts with marketing and sales, ensures delivery of the service or creation and distribution of the product, and completes with collection of payment from the customer and making of payments to suppliers.
It is possible to automate this journey with CRM & ERP technology almost in its entirety, including for physical services delivered in person, to increase EBITDA and revenue quality, enable faster growth and shift the valuation multiple.
The other essential transformation is AI-enablement: using AI-driven collation and interpretation of data to drive service quality, reduce costs, and identify and facilitate new revenues.
Breadth and depth of analysis
We examine how the organisation’s use of technology is driving revenues, operating efficiencies, risk and the EBITDA multiple that the next investor is willing to pay. The technology factors that impact operational efficacy are diverse, ranging from the senior management team’s aptitude to technology (which directly impacts ROI) to the systems architectures which drive the cost of regulatory compliance or the organisational capability to expand into new markets.
Depending on the investment thesis, certain aspects are important to keep an eye on but will have little impact on enterprise value at exit. However, we know from experience that an entire investment thesis can be derailed by one or two factors buried deep down in the organisation, so there are areas of the operations and technology where we go into great detail.
We provide a view on the current and the future, on performance, risk and opportunity - and, critically, what should be in the 100 day value creation plan: recommendations for action, expected costs, risks and time to implement.
Due diligence + strategy + planning
We start our pre-deal value creation by conducting a full due diligence of the technology and operations of the target company. This allows us to identify opportunities, which are often a blend of cost reduction and investments to increase operational efficiency. We model the opportunities for ROI, effort and risk.
We then design a strategy to pursue the most appropriate opportunities, ensuring a fit with the investment thesis, fund strategy and management bandwidth.
To maximise the chances of success, we design a detailed project plan for the target company to implement the strategy. This planning includes work-streams with timelines and dependencies, staffing and skills requirements, implementation risks and mitigation options, KPIs and measures of success.
Integrated AI, technology & operations strategy
We author strategies for portfolio companies to implement Ai-enabled and tech-enabled service delivery. Our strategies balance the short-term rewards of implementation, the later impact on Enterprise Value at exit, and the risk of revenue loss due to service interruption. They assess components of the Target Operating Model to identify the current efficiency in operational processes and the benefits of introducing technology to fulfil part or all of the process outcome.
We articulate the optimal technology solutions (impact, cost and ROI), the best approach to implementation, and register key risks and challenges with associated mitigation options.
The core technologies of AI-enablement are third-party LLMs and proprietary data - establishing a single (data) view of the customer and suppliers is crucial. Without a single source of truth, it is impossible to build AI-enhanced operations solutions that can deliver 20-30% process efficiencies.
The core technologies of tech-enablement are CRM and ERP systems, which can be implemented using third-party solutions, developing proprietary systems, or a combination of both.
Implementing third-party solutions is a trade-off between customising the technology and changing the operational processes to suit the presets of the technology. Customisation and process redesign both require investment and both present risks to service continuity. Most organisations that have advanced technology enablement with third-party systems have heavily customised the vendor solutions (which they are designed to enable).
In esoteric services there is an advantage to developing proprietary technology because the time and cost of adapting third-party solutions often gives a poor ROI.
We have not seen any negative impact on valuations due to high levels of customisation – it is a necessary cost of both third-party and proprietary technology for the foreseeable future. Nor have we seen a market pricing that differentiates between the main vendors such as Sage, Microsoft or Oracle. We have seen that having a single view of the customer, which such systems can deliver, reduces deal friction and, in some cases, increases the valuation multiple.
Reducing cost of technology operations
Our approach to cost reduction is to focus on the core technology-related levers of the company’s Free Cash Flow.
Renegotiating supplier contracts, moderating cloud consumption costs and rationalising the product portfolio can all be achieved within 6 months without additional investment. Introducing AI to improve discrete operational processes does require investment but can be implemented and delivering a positive ROI within months.
There are also key longer-term actions, notably changing processes and infrastructure of Customer Support and Engineering. These require materially higher effort and upfront investment, and take longer to deliver.
As with all of our work, we deliver fully costed recommendations that consider time and risk to implement.
Realistic implementation plans
To ensure that value can actually be realised, we draw upon our real-world operational experience to design implementation plans that are realistic and fully costed.
Our planning articulates the key issues of successful implementation, including roles & skills, risk management, contingency, dependencies and preparation. We design the implementation workstreams, and the overall timeline, to align with the constraints of the investment thesis and the ability of the target to gear-up for delivery.
01. Pre-deal value creation
02. Opportunity value check
03. Transformation strategies to create star investments
Rapid insights into where (and if) to increase investment
We have designed a low-cost, rapid assessment to identify if you can fix the operational performance of an underperforming portfolio company.
The assessment is light-touch, highly structured and quantitative, allowing for portfolio-wide comparisons even across multiple industries.
We review the drivers of financial performance and the PL of the original investment thesis, and go looking for operations and technology levers that the management team can pull to turn around the IRR of your investment. If there isn’t any hope, we’ll tell you. But if there is an opportunity, we will outline what to implement, with a high-level view on costs, resources and risks.
This is a pared-down version of our in-depth pre-deal value creation work, which focuses on the essentials – the handful of levers that can have the biggest impact and which are still open to the management team in the time remaining.
Delivery is almost entirely off-site, working with the operating partner to gather exiting company data and to understand your firm’s risk appetite for additional investment into existing and underperforming assets. If we do have to engage with the portfolio company, we typically only require a couple of hours of the management’s time.
How to transform an average portfolio company into the star of the fund
Where our opportunity value check is a quick assessment to identify the business case, our transformation strategies are the counter-part: an in-depth and comprehensive tech-ops implementation plan to transform the enterprise value of an existing portfolio company.
We find that further investment in slightly underperforming portfolio companies tends to offer the best returns – there is often too little time to materially turn around an asset with very poor IRR, and adding to already high-performing businesses generates little or no tangible ROI.
The foundation of our transformation strategies is the same as for our pre-deal value creation strategies: comprehensive analysis combining technology and operations due diligence with first-hand research amongst industry leaders and operational experts. Where the transformation strategies typically differ is in the scale of intervention – reflecting the limited time left in the planned investment period, and the capital restrictions for additional investment that the fund might be operating under.
The implementation plans of these strategies are comprehensive, articulating the key workstreams and deliverables, roles & skills, risks, dependencies and metrics of success.
04. More on our due diligence
Service delivery mapping
Different companies seldom use technology in exactly the same way, therefore we start our technology investigation by mapping the service delivery processes that drive most of the investment thesis value. Mapping the service delivery articulates:
-
Where proprietary and third-party technology is critical to the investment thesis, and where components can be substituted by the company or made irrelevant by its competitors.
-
FTE dependencies (‘human links in the chain’) that present risk and growth constraints or, more typically, must also scale as the technology scales resulting in erosion of operating margins.
Performance assessment & benchmark
Our performance benchmark is a blend of historical observations made by us and of best practices currently being deployed in industry leaders throughout the world.
To ensure consistency of our assessment, we have developed proprietary questionnaires that our due diligence teams use to synthesise their findings. These are not given to the target company to answer, nor asked verbatim. We combine this with programmatic analysis of cybersecurity, code and infrastructure to produce quantitative performance assessments and benchmarking.
Some risks, such as poor cybersecurity posture, are purely technical and can be identified with programmatic tools. Others are structural, such as inadequate database architecture, or operational in nature, such as poor regulatory compliance or poor adherence to cybersecurity practices. For these risks, identification requires a blend of structured assessments and interpretation based upon operational experience.
For every risk to the investment thesis we identify, we reach out to our global network of practitioners to explore best-in-class mitigation options, the value at risk, mitigation effort and the probable cost of mitigation.
Target operating model
We assess the target operating model by investigating:
-
Operational processes – how the target achieves its EBITDA across the entire range of activities including core revenue generation, Finance, HR, Procurement and customer services.
-
Service delivery model – the structure of the organisation, outsourcing and partnerships that delivers the core services.
-
Technology – all systems from front line to back-office.
-
People – roles, responsibilities, utilisation, efficacy, skills, process activities and retention.
-
Management insights – what is reported and measured, and how the data is gathered and utilised.
-
Governance – risk management, controls, communications and regulatory compliance.
Maturity of tech-enabled service delivery
We assess the maturity of tech-enabled service delivery in portfolio companies by reviewing the level of technology and human intervention in three core operational journeys: Lead to Cash, Trouble to Resolve, and Concept to Market (service feature development). These journeys are common across all industries.
Lead to Cash is the customer journey from enquiry through purchasing, service delivery (including provisioning by the company to deliver the service) to reporting, invoicing and payment. Tech-enablement in this journey increases process efficiency, resulting in increased EBITDA and shorter service completion times. It also increases quality and consistency of service delivery, resulting in reduced customer churn and ultimately lower cost of customer retention. Implementing advance service automation in this journey has the greatest impact on EBITDA.
Trouble to Resolve is the customer services journey, from when a customer seeks to find an answer to their problem, through to that problem being resolved to their satisfaction. With recent advances in customer service SaaS, most notably embedded Generative AI, the customer service can be highly automated whilst ensuring (an indeed increasing) customer satisfaction. Automation is not a replacement – input from human service agents will always be required for difficult issues, but at very reduced levels. The investor returns from automating this journey tend to come later in the investment timeframe, with sustainable increases in EBITDA arising from increased customer loyalty and with a clear single view of the customer contributing to the valuation multiple.
Concept to Market is not a customer journey, but the internal process of developing service features that ultimately benefit service delivery to the customer. High levels of automation tend to reduce time to market and increase utility, and thus improve ROI. But the main benefit of advanced automation in this operational process is a shift in valuation multiple at exit.
Risks, challenges & mitigation options
We have developed a standardised risk assessment framework which quantifies risks for both the immediate and longer term, giving a view on how a risk is likely to play out over the intended investment timeframe. The assessment highlights the both the potential impact and the likelihood of occurrence.
Along side risks, such as the departure of key personnel, we also identify potential challenges to the investment thesis, such a lack of cloud hosting capacity or probable difficulty in meeting a product release schedule. For both risks and challenges we articulate the value at stake and options to mitigate, giving an indication of effort, time and cost to resolve.
