Are companies owned by private equity managers in danger?

One in 10 companies owned by private equity managers is in intensive care because of the coronavirus pandemic. Do you have portfolio companies that fall into this category? Or are you looking to invest in new companies but re-thinking your strategy due to the additional financial risks? Have you relied on revolving lines of credit, the Paycheck Protection Program, or other stimulus programs to ensure they stay afloat?

Velosio is a leading systems integrator successfully navigating the market changes brought about by this pandemic. We use the technology we sell. This has allowed us to be nimble, flexible, and deeply analytical. Our cloud technology platform, Microsoft Azure, has equipped us with the data-driven insights and edge-to-edge technologies we need to adapt existing lines of business and form new ones.

What do we mean by data-driven insights?

This is the process of identifying opportunities to drive bottom-line value by analyzing real-time operational and financial data, data mash-ups which combine structured and unstructured data, against which we apply Artificial Intelligence (AI) and Machine Learning (ML), and serve it up on role-based data visualization tools.

Bottom-line results are an essential ingredient of success for private equity firms. Consequently, return on invested capital (ROIC) is a critical metric. ROIC is directly impacted by the bottom-line performance of your portfolio companies. Increasing net income or reducing capital employed positively impacts your ROIC. As you look to turn around the performance of existing portfolio companies and evaluate the financial risk of target firms, consider the role of technology, specifically technology platforms which focus on people and processes. Competitive advantages and bottom-line results are created with the alignment of people, process, and technology.

So how do Private Equity Managers increase return on investment capital?

Is it by doing the same work faster? This rarely has any impact on the bottom-line. In many companies, traditional work has already been optimized for efficiency. Instead, focus on eliminating work or working differently.

The last seven months has seen an acceleration in the adoption of cloud solutions, cloud innovation, and digital transformation. We have seen fundamental changes to the way people work and interact, from being remote to needing ‘touchless’ experiences. Today, we are working differently and incorporating technology into our operations at a rapid pace. Manual and repetitive work is being replaced by Robotic Process Automation (RPA). AI and ML are essential components to forecasting cash-flow and demand planning. Service bots converse with our customers and Internet of Things (IoT) connected devices monitor and maintain our customer assets and equipment.

To learn more ways cloud can help your organization, download this guide.

 


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