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Unlocking Current Value and Scaling Growth for PE Portfolio Companies: A Guide to Impactful Org Design

Posted on by impactpoint
Org Design for PE Growth & Value
18
Mar

Private equity (PE) portfolio companies often operate in a fast-paced environment where efficiency, scalability, and value creation are paramount. As these companies grow through acquisitions or face strategic pivots, organizational design (org design) emerges as a crucial tool for achieving operational excellence and maximizing enterprise value. In this blog, we’ll explore the central aspects of org design, why it matters, and how Impact Point Co.’s rapid, metrics-driven approach can help PE portfolio companies thrive. For PE-owned companies, where time to value is critical, a well-executed org design can unlock significant operational and financial benefits.

The Case for Org Design in PE Portfolio Companies

PE-backed companies face unique challenges that make org design essential:

  • Frequent Acquisitions: Add-ons often result in shadow organizations, overlapping roles, and inefficiencies.
  • Exit Preparation: Restructuring 18-24 months before divestiture can enhance EBITDA and enterprise value.
  • Budget and Forecast Alignment: Org design supports annual budgeting and rolling forecasts, ensuring resources align with strategic goals.
  • Operational Model Changes: When legal entities or operational strategies shift, org design leads to smoother transitions.

Example: A PE portfolio company with multiple bolt-on acquisitions faced inefficiencies due to unintegrated structures. Impact Point’s org design process consolidated functions, achieving a 12% cost reduction and considerable value creation.

When Should You Consider Organizational Design?

Org design isn’t just for crises or cost-cutting; it’s a strategic tool for creating long-term value. Here are six scenarios when it’s time to consider org design:

  1. Post-Acquisition Integration: Streamline structures after mergers or acquisitions to eliminate redundancy and clarify roles.
  2. Pre-Exit Optimization: Maximize valuation by restructuring operations 18-24 months before a sale.
  3. Annual Budgeting Cycles: Align your org structure with financial planning and strategic objectives.
  4. Rolling Forecasts: Adjust your design to meet evolving business needs and close performance gaps.
  5. Major Reorganizations: Reset your operating model to support new business strategies or legal entity changes.
  6. Ongoing Improvement: Make org design part of your company’s culture by monitoring key metrics and improving continuously.

The Impact Point Approach to Org Design

Impact Point Co. specializes in organizational design for middle-market PE portfolio companies. What sets Impact Point apart is a sprint-based methodology that delivers results in 6-12 weeks—compared to the 12-plus months traditional processes typically require. Here’s how it works:

  1. Data-Driven Diagnostics:
    • Comprehensive analysis of organizational metrics
    • Establishes a clear baseline for decision-making
  2. Sprint-Based Engagement:
    • Focused, time-bound sessions with key stakeholders
    • Uses OrgVue technology for real-time visualization and adjustments
  3. Tailored Design and Implementation:
    • Aligns with design principles such as optimal spans of control and role clarity
    • Minimally invasive process that integrates seamlessly into business operations
  4. Final Recommendations:
    • Detailed implementation plans with action steps, risk mitigation strategies, and projected savings

Benefits of Impact Point’s Org Design Process

The results of Impact Point’s org design engagements speak for themselves:

  • Cost Savings: Achieve 10-20% headcount reductions by optimizing roles and removing redundancies.
  • Improved Efficiency: Simplify layers of management and clarify responsibilities for better decision-making.
  • Enhanced Enterprise Value: Restructuring can significantly boost EBITDA and increase valuation multiples.
  • Scalability: Create a future-ready organization capable of supporting growth through acquisitions or new markets.

What Makes a Successful Org Design?

Success in org design requires a combination of leadership alignment, clear goals, and thoughtful execution. Here are the main elements to consider:

  • Leadership Buy-In: The CEO and executive team must champion the process, confirming alignment across all levels.
  • Clarity in Roles: Employees should understand their responsibilities and how they contribute to organizational goals.
  • Metrics-Driven Decisions: Use data to identify inefficiencies and track progress against baseline metrics.
  • Continuous Monitoring: Embed org design into your company’s culture with regular reviews and adjustments.
  • Change Management: Establish a project management office (PMO) to oversee the process and mitigate risks.

Real-World Results: A Case Study

Challenge: After multiple acquisitions, a PE-owned logistics company faced inefficiencies and unclear roles after multiple acquisitions.

Solution: Impact Point implemented a sprint-based org design process, reducing middle-management layers, aligning roles with strategic objectives, and creating a scalable operating model.

Result: A 15% reduction in headcount costs and a streamlined structure improved communication and decision-making.

Explore Organizational Optimization with Impact Point

Unlock the full potential of your organization with Impact Point Co.’s strategic org assessment. Our team works closely with businesses to analyze structures, identify inefficiencies, and uncover opportunities to save costs and improve performance.

In just a few weeks, we will set these tactics in motion:

  • Evaluate HR and finance data to establish a clear organizational baseline.
  • Pinpoint areas for cost reduction, scalability, and operational efficiency.
  • Deliver a customized roadmap with actionable recommendations tailored to your business.

Let’s discuss how an org assessment can yield measurable value for your company. Contact Impact Point today to start the conversation.

Optimizing Organizational Efficiency: The Path Forward

Org design isn’t just about cutting costs; it’s a strategic investment in your company’s future. By aligning structures, roles, and processes with your goals, you can unlock value, improve efficiency, and create a scalable foundation for growth. Impact Point Co.’s rapid, data-driven method ensures PE portfolio companies can achieve these outcomes with minimal disruption. Don’t wait. Get started today!

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Chad Stacey

Partner

Chad Stacey is one of the founding partners of Impact Point Co., and leads the firm’s M&A Services group. Based out of New York, Chad has 16+ years of experience in providing professional services to clients from the PE middle market through to Fortune 100 companies. His experience includes merger integration planning & execution, synergy assessments, carve-out support, cost efficiency and working capital optimization. Chad tailors Impact Point’s M&A services methodologies to each client, and his expertise spans many industries including technology, telco, industrials, healthcare, consumer products, and pharmaceuticals.

Chad also serves as the Program Director for the US M&A Executives Council for The Conference Board, a not-for-profit think tank composed of M&A leaders from the world’s largest acquirers.

Prior to founding Impact Point, Chad previously worked within Alvarez and Marsal’s Private Equity Performance Improvement group, primarily focused on supporting PE Portcos in the middle market to execute their portfolio investment strategies. Chad led programs including merger integration, carve-outs, cost take-out and other performance improvement initiatives. Prior to A&M, he worked with EY in London, UK and Perth, Australia, where he delivered transaction advisory services, due diligence and working capital optimization for both Private Equity portcos and public companies. His qualifications include a BCom from Curtin University in Western Australia, and his postgraduate qualifications include a GradDip in Applied Finance from the Financial Services Institute of Australasia (FINSIA), and he is a qualified CA (Institute of Chartered Accountants, Australia and New Zealand).