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In the current environment of low interest rates and high uncertainty, there is a natural tension between investing for return and divesting for safety. As a result, there is an enormous appetite for transactions now, with plenty of willing buyers and sellers.

Already, we have seen that the rapid normalisation and widespread acceptance of Environmental, Social, and Governance (ESG) concerns and the explosive growth in ESG funds are driving all sorts of business and investment activity in this space. Business leaders are no longer waiting to see how governments act; they are increasingly setting the path forward and subtly insisting that governments catch up.

Interest rates will rise as the world recovers from COVID-19, but many of our clients ask, will the world’s economies rise in tandem? We see a few common and emerging business challenges among our clients:

Business objectives that lack clarity and a measurable economic benefit

Digital transformations that are unnecessarily costly with slow speed to value

Program complexity and duration that can increase the risk of failure and overruns

A digital transformation should not be considered a ‘cure-all’ to any ills, but rather a logical next step following a rigorous diagnosis of an organisation’s needs. What is the best way to define your transformation roadmap?

Digital transformation target outcomes and objectives are rarely concrete or sufficiently robust to drive tangible, lasting value creation. It is difficult to define, strive for and track the journey towards a successful outcome without a clear understanding of what really matters.

Be clear on the business outcomes you want to achieve, and how

We address this upfront through clear value-driven prioritisation of specific business outcomes to drive expected impact.

To maximise value, opportunities that can be addressed quickly and require minimal change, (often employing tech ‘shortcuts’ such as middleware), need to be front and centre of the transformation roadmap. 

In parallel, there must be a deep cultural and operational shift to ‘digital first’. Achieving best-in-class outcomes in the medium to longer term, requires efficient digital delivery and continuous data-driven optimisation hardwired into the product, service, and customer experience across the entire operating model. 

Unclear objectives can often lead to unsatisfactory outcomes. How can you ensure that unlocking value is front and centre of your digital transformation?

Ill-defined objectives make it incredibly hard to value-engineer digital transformation programs. This results in them often being far-reaching yet ambiguous in scope, costing multiples of what they should with long implementation timelines and payback periods.

Value-engineer your project portfolio with a healthy bias for straightforward near-term solutions

Rapid optimisation, digitisation and automation of existing processes can often quickly deliver value within the constraints of legacy operating models. Dual-track architecture is a key tactic that can be employed to unlock these opportunities. By separating smaller tactical efforts from longer-term infrastructure projects, companies can prevent smaller, yet collectively high-value projects from being deprioritised in favour of the ‘shiny infrastructure of the future’.

Additionally, rigorous value engineering is an indispensable tool to manage down program cost and ensure maximum ROI. Too many digital initiatives get actioned because they are ‘cool’ or ‘the next big thing’. Validating the link between a particular technology initiative and business value forensically is essential.

Overruns, delays and re-scoping are common aspects of any program failure. How can you create a pipeline for deployment where accountability is key?

Program failure is still extremely common and rarely is as explicit as a program being abandoned. 

Instead, it often manifests in dramatic cost overruns, delays and re-scoping exercises that mask successive redefinitions of what success would look like, how it is going to be achieved and how long that will take. At worst, this means technology is outdated or redundant by the time it is deployed.

Execute at pace, front-load benefit generation, and hold your business leaders accountable

Modularised program design and delivery accountability are critical to mitigating risks of technology projects and maintaining a high-velocity deployment pipeline that delivers incremental early value.

Done the right way, modularisation allows companies to reinstate single-point accountability and ownership of business lines for delivery of individual program components associated with specific value outcomes – accountability that is often lost when implementation is delegated to monolithic technology divisions.

Ben Thompson

In many ways, due diligence is like the toughest sport on Earth. In high-level sport, there are marginal differences between the gold and silver medal – usually a fraction of a percentage. We find that extra benefit outside of the spreadsheet by bringing deep operations knowledge and excellence to the playing field. Where we work, in our ‘game’ – winner takes all.

Ben Thompson

Partner

Success in due diligence is achieved through finding the balance between avoiding a poor investment and seeing value where others do not. Across industries, our clients have found us to be the right partners to identify and communicate business value.

We know where to find sources of value and have extensive benchmark performance across sales force effectiveness, cost-out and capital management and procurement synergies.

Across more than 125 successful due diligences, we identify and drive lasting EBITDA growth

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10-20% EBITDA improvement delivered in 2-5 years

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15-25% revenue improvement in five years, often delivering half hard dollar value in the first two years

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6-18% in addressable spend savings

Client success stories

Success

Identified 30-60% EBITDA growth opportunities at a target multinational healthcare business

Identified >$80m additional benefits across target FMCG business

Identified $200m EBITDA improvement potential in a target multinational logistics company

Meet our Transaction Services leadership