Add-on Integration Assessment for Middle-Market Companies
Middle-market PE firms typically create value in platform portfolio companies by adding multiple smaller acquisitions over the platform’s life cycle. Over time, this strategy could result in several smaller (revenues ranging from $1M to $15M) add-on companies with bare-minimum integration (e.g., financials, IT) achieved with the platform.
Specific challenges begin to emerge during the ownership period, especially when initiating exit strategies/planning:
- Inefficiencies (e.g., sales, operational, financial) resulting from the lack of a fully integrated platform
- Value-creation erosion due to disparate processes, systems, and resulting organization within the platform
- Unattractive investment for potential future investors