PE Has Achieved Formula One Status, But Their Car Sucks.

Private equity is the undisputed Formula One of business models. It’s a high-octane race in which you buy a company, rev it up for 3-5 years, and sell it at the finish line for a 3-5X return. It’s a gear-grinding sprint from start to finish.?

?But there’s a problem.?The instrumentation is abysmal.?

Portfolio executives spend around?20% of their time wrangling, studying, and reporting data. What they get is a retrospective snapshot of numbers, brief moments of isolated insight in a sea of conjecture, reactivity, and frustration. In short - managed chaos.

?Why?

Private equity’s instrumentation is “good enough”.? If every other sponsored midmarket company is using Excel and ERP system-reports to navigate the track, qualifying for the race and achieving industry-standard alpha is pretty straightforward (though most firms we speak with say it’s getting tougher).

However, I haven’t met a PE partner who isn’t obsessed with performance improvement. They’re never satisfied with the ingrained and old-school.? They’re dedicated to staying ahead of the pack when it comes to applying people, processes, and technology to reliably execute to plan.

?If it doesn’t feel like data is at the forefront of your value-creation philosophy, consider this...

No complex system can sustainably run at full speed without good instrumentation, whether it's a turbine, a CNC machine, or an F1 car.? And if F1 cars are complex, PE-backed, buy-and-build companies are orders of magnitude more so, in part because they’re a system of humans.?

Give humans visibility, and you give them ownership, agency, the ability to focus on priorities.?

Give them confusion and contradiction, and they’ll slam their helmets down as they leave the office.

We’ve done this for 12 years running and have tested every approach for getting a company to data-driven. Through the process, we've developed a methodology that gets the job done in almost any midmarket company, and fast.?

See examples of the instrumentation we can roll out in a matter of weeks and read the full article at: Private Equity Has Achieved Formula One Status, But Their Car Sucks. (bluemargin.com) .

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Best,

Blue Margin

https://BlueMargin.com

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P.S.? We offer a fractional data team on demand - in a straightforward, monthly subscription. We give your portfolio companies access to comprehensive, ongoing data management and analytics without the need to hire an internal team. Learn about our Managed Data Service here.?