As the line between revenue-enhancing priorities and cost-cutting initiatives blur, the most complicated value creation initiatives—supply chain and human capital—offer the biggest payoffs for private equity investors in manufacturing and distribution.
In any sector or industry, revenue growth is by far the biggest contributor to value creation for private equity investors, eclipsing any combination of multiple expansion, free cash flow generation, or margin improvement. In the manufacturing and distribution sectors in particular – now undergoing the most far-reaching transformation than any other time over the past 50 years – the focus on top-line growth is especially paramount.
If private equity used to be considered “patient” capital, there’s more urgency and pressure than ever before to move quickly to make a bid, close a transaction and then get to work on the operational initiatives that will drive the most value for portfolio companies. The most acute risks that surface during operational due diligence – supply chain gaps and human capital shortcomings – now represent the most attractive areas for investment to fuel profitable revenue growth.
Download the article to learn how to accelerate speed to close and top-line growth by turning operational due diligence risks into value creation levers.