87% of partners said that tech challenges impacted their value creation plans.
With 25% of portco key technical employees leaving during the first 12 months post-acquisition.
Today, only 20% of all value creation is tech led.
Buyout private equity firms predict they are missing up to 15% EV but not focusing on tech challenges.
You’ve probably found it’s not as easy to drive improvements in EBITDA or slower revenue growth in 2022.
Did you and your firm spend most of 2020 and 2021 working on new buyout deals only to find that in 2022 value creation is that much more challenging than it used to be?
You’ve probably been investing heavily in the software and technology space. You’ll likely have been busy with M&A and are ready to merge three companies into one. Or better yet, you have discovered some extensive cost profiles, in particular when it comes to the cloud!
That inanimate technology spend; well, you need that for growth, right? The economies of scale planned post-M&A aren’t quite how you planned. You’re being asked to invest more in technology spend in your portcos, rather than less!
In this eBook, you’ll find insights to help you challenge the status quo and find value creation opportunities that you weren’t sure existed before. You can expect:
- Practical first-hand initiatives that PE firms and their portfolio companies have used to maximise tech value creation.
- The typical paths portcos with technology estates will take and the impact of each of them on EBITDA.
- Simple steps you can use to start creating this additional value through technology at your portfolio companies.
You’ll be confident to approach portfolio company CTO’s, even if you don’t have a technology background.
For value creators only!
Here are examples of where you can create Tech Value for your Private Equity firm.
The hard part is finding this value; fixing the problem when you’ve uncovered it is the easy part.
Like how do I reduce churn due to service, increase performance to be best in class without increasing costs and scale my subscribers 5x over 24 months ahead of an exit?
Like migrating to the cloud in 6 months, costs increased from $20m to $60m p.a. all while moving from a paid subscription model that could increase user volumes 20x in 12 months.
Like merging two global tech platforms, One with a 22x higher cost per user, the other causing 200+ incidents per week and the biggest cloud provider in the world can’t get the servers you need.
And here’s what your peers said about Tech Value Creation™.
From those on the front lines.
“We’ve tended to avoid technology change in the past, we tried, but results were inconsistent, not anymore”
“If we’d found just $1m of EBITDA, that would have been a very significant find, these are very big numbers’”
“Why are the tech team not finding these opportunities? It’s just inanimate cost? It’s out there now, lets go get it”
You are probably wondering, who are Market Hill?
Market Hill is the value creation arm of the Northdoor Group; together, we have 30+ years of experience in creating better business through technology.
Market Hill do this alongside Private Equity firms to maximise their portfolio companies’ future valuations.
We solve complex technology problems to unlock step changes in value creation.
You might also be thinking, those are all good points, we should be driving more technology value across our portfolio companies.
But, what do we need to look out for and how do we get started?
Technology challenges can severely limit technology value creation, you’ll recognise the symptoms, they are typically experienced as:
1) Linear technology or cloud cost growth
2) Technology related user churn
3) Long running digital transformation programmes
When talking with tech leaders, as an operator or value creation, it’s hard to know which of these are worth your time and investment to solve.
If these symptoms resonate, and you want to find out what to do next, we should talk.
Please email firstname.lastname@example.org to speak to a real person, and challenge the status quo.