Unlocking the Hidden Value in Portfolio Holdings

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Private equity firms can boost EBITDA by 10 to 20 % with operational improvements

With increasingly challenging market dynamics, private equity firms need new weapons in their arsenals to continue their successful performance of the past ten years, claims George Coffey, president of USC Consulting Group, LLC (USCCG).

Mr. Coffey and USCCG Director of Finance and Administration Tom Klebeck have co-authored a white paper in which they outline the steps private equity firms can take to generate savings of three or four times their investment from operations improvement initiatives. In Unlocking the Hidden Value in Portfolio Holdings, the duo recommends that PE firms become more assertive in identifying improvement opportunities; adopting a more hands-on management approach with the companies they hold; and carefully weighing the cost of investing in improvement initiatives against the likely rewards of doing so.

"Not only can focusing on operational improvements boost performance in lagging companies," says Mr. Klebeck, "it can reduce risk in the acquisition process and bolster the bottom lines of better-performing companies in PE portfolios, as well.

"As a matter of fact," he adds, "we have found that operational improvement can boost the finances of the better-performing companies by as much as 10 to 20% increases in EBITDA."

Mr. Coffey and Mr. Klebeck agree that PE firms must give their company managers the right tools, information systems, processes, and coaching, which they refer to as the management operating system, to meet their new performance objectives.

"These include formal tools like business intelligence portals, that can capture, analyze and share information, as well as informal tools like meetings, method-sharing, and so on." Mr. Coffey maintains. "In other words, it means reviewing, and possibly changing, all the tools managers use to understand and manage the flow of their materials and products across the entire supply chain. That, in turn, requires teaching people how to operate in a new process and to use the new information and tools they have to realize the financial gains that operational improvements can generate."

For more on USCCG's in-depth insight on how PE firms can capture impressive financial rewards, access the white paper at http://www.usccg.com.

About the Authors
In addition to his overall management responsibilities, USCCG President George Coffey works closely with the investment community, including private equity and investment banking, as well as seeking and negotiating possible acquisitions to enhance USCCG's product offerings and fuel its growth. He currently chairs the Strategic Planning Committee and is a member of the company's Executive Board with responsibility for policy matters. Mr. Coffey began his career with USCCG in 1978 as a project consultant in operations. His responsibilities grew with appointments to project manager, operations manager, business development executive, and regional manager/analyst. George became a partner in 1989, an executive partner in 1995, a senior partner in 1999, and president in 2006.

USCCG Director of Finance and Administration Tom Klebeck is responsible for broad financial oversight of firm's activity, as well as targeted financial analyses for specific clients. Mr. Klebeck was most recently a financial consultant for VantagePointe Solutions in Orlando, FL. He also founded three successful companies, including a real estate development and investing company. Prior to that he spent 12 years with Equifax in Tampa and Atlanta, where he rose through various controller and vp-finance roles to become vice president of operations. He was also a founding officer of the firm's multi-billion-dollar information services spin-off, ChoicePoint. Mr. Klebeck has earned a solid reputation as a fierce cost controller and profit improvement specialist.

About USC Consulting Group (USCCG): USCCG is an independent operations management consulting firm with nearly 40 years' experience in the area of business performance improvement. It combines extensive subject matter expertise with enabling technology to drive and sustain superior operational and financial results. The firm offers an array of services that include Six Sigma,Lean enterprise transformation, supply chain optimization, process improvement, project management, value stream mapping, training and facilitation, blended learning solutions, modeling and simulation, and world class maintenance management and reliability services. USCCG is a Microsoft Managed partner headquartered in Tampa, FL. It also has offices in Chicago, Montreal, and Toronto. For more information, visit http://www.usccg.com.


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