With the recent slowdown in transaction deal flow in the last 12 months, many private equity firms are spending additional time reviewing the health and wellness of their portfolio companies—looking for ways to enhance performance through strategies such as revenue diversification, product or service profitability, customer intimacy, operational process optimization, and cost containment.  The latter three, in particular, are generating considerable attention.

Many companies already have taken the traditional step of implementing across-the-board budget cuts for every group.  There’s no secret to this approach and, let’s face it, many companies could use a little “cost trimming.” These generic cost reduction exercises, however, can be dangerous because they typically don’t address specific inefficiencies and, therefore, have a long-term impact. 

With deal flow slow, private equity firms have three targeted opportunities for addressing operational efficiencies, improving customer intimacy, and enabling cost containment. 

Salesforce.com: A Proven Solution
Taking advantage of a new Salesforce.com solution designed especially for the unique needs of private equity firms —a solution that is helping firms optimize key processes from capturing potential deals, to managing activities and relationships, to preparing fund accounting.

Fair Value Reporting  
Complying with new FAS 157 rules for uniform valuation reporting at both the portfolio and equity firm level.   These new rules have private equity firms scrambling to meet reporting requirements, which can consume analyst time. Fortunately, there are reporting solutions that can help alleviate these unique challenges. 

IT Asset Management
Utilizing IT Asset Management to lower costs and improve cost transparency.  This strategy enables private equity firms to drive down the total cost of ownership for both hardware and software assets—often producing hard dollar savings in just a few months.

We hope you find these articles useful and relevant to managing in the current environment.  Enjoy the remainder of the summer, and visit web site for additional information on our Private Equity service offerings.