Case Study

A Microcap’s Journey: Enhancing Operational Efficiency for Acquisition Readiness

Customer Profile

The client provided customized IT solutions tailored to diverse client needs. As they prepared for a potential sale to a private equity firm, their goal was to not only affirm their operational efficiency but also to ensure complete transparency and readiness for the acquisition. The company’s operations included a blend of onshore and offshore resources, which enabled them to scale solutions while maintaining flexibility in their service delivery.

Objectives

The primary objective was to conduct a thorough due diligence assessment of the company’s key operational processes. This involved evaluating their current state, identifying risk areas, and suggesting improvements to reach higher levels of process maturity, ultimately making them an attractive acquisition target.

The Challenge

With a potential acquisition on the horizon, the company needed to thoroughly assess its operational processes and identify any red flags that could derail the sale. The challenge was compounded by limited access, as our team could only utilize the data room and conduct interviews with the CEO and HR department.

Our Approach

In partnership with the company and potential buyer, our firm was engaged to analyze the operational efficiency of the company. Given the constraints of limited access to internal resources, our approach was highly focused:

We leveraged the available data room resources to conduct a comprehensive review of operational documents and performance metrics.

Targeted, well-prepared interviews were conducted with the CEO and HR department to understand deeper operational insights and assess any undisclosed risks.

The assessment was strategically conducted to sift through large volumes of data efficiently, focusing on critical operational areas that could impact the acquisition’s viability.

This approach was also enriched by referencing industry standards like the Professional Services Maturity Benchmark study.

Results

Our detailed 50-page assessment indicated that the company predominantly functioned at a Level 1 to Level 2 process maturity. We also uncovered compliance issues within the HR department, which were effectively resolved, significantly reducing the company’s risk profile prior to the acquisition. Additional recommendations included structured plans for HR processes, investment in IT security improvements, and gradual development of the Managed Services department. With targeted enhancements, the company was positioned to reach a Level 3 maturity, making it a promising candidate for subsequent growth under new ownership.
The due diligence assessment prepared the company for acquisition by resolving critical compliance issues and recommending enhancements, thereby setting the stage for enhanced operational maturity and growth potential under new management. It also provided essential guidance for effectively managing operations post-acquisition.

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