Private equity company, make your life easier with Data & Analytics tools

Target screening seems to be regarded by private equity buyout investors as both time-consuming and a nuisance. However, the introduction of new D&A tools has made screening processes more efficient and less time-consuming, which, in turn, allows investors to allocate more time to creating value for their portfolio companies.

private equity

Who knows where the time goes?

According to a study commissioned by Tekes and FCVA (Finnish Venture Capital Association), private equity buyout investors spend a significant portion of their time selecting and developing acquisition targets. In fact, it is estimated that, on average, over 50% of the lifespan of a fund is taken up by these activities.

Furthermore, almost one quarter of a fund’s lifespan typically goes into target selection alone. Hence, it is essential that this time be used productively and that suitable targets be chosen. To achieve this, it would clearly be beneficial to make the screening process leaner and less time-consuming, as this would allow more time for developing the targets, which yields the real value for private equity players.

Private equity investors live and die according to their respective track records. It is thus vital for them to make profitable and suitable investment decisions and to be able to develop their portfolio companies so as to maximize their value. The better the target selection is at the start, the easier it will be to establish value creation practices later on.

What gives a headache to private equity investors?

According to the above-mentioned study, the issues that create the worst headaches for private equity investors are the finding of suitable investment targets, and issues related to the quality and quantity of the potential targets.

In addition, approximately two-thirds of private equity investors examine at least 30 companies per investment.

Therefore it is imperative, as a time-management tool, to make the screening process as efficient as possible, and to gather enough data on potential investment targets in order to make coherent decisions on which targets should be contacted and on how the acquisition process should be started.

How D&A tools can replace painkillers

The screening of potential investment targets can be made easier by using sophisticated D&A tools that help cut through the noise and support private equity investors in recognizing those targets with the highest potential for growth in value.

Establishing industry benchmarks is essential for any screening process, as it allows the performance of potential targets to be matched against industry best practices. But all too often, benchmarking doesn’t provide the details and context required for a truly well-informed investment decision.

Therefore KPMG has developed a unique and rapid D&A tool named “Benchmarking Plus”. The tool goes beyond the usual publicly sourced data used in screening and taps into KPMG’s robust proprietary database, along with third-party databases, thus giving the private equity investor access to beneficial information e.g. financial, operational and segment specific KPI’s gathered from our engagements.

With the help of Benchmarking Plus and KPMG, private equity players can save time and make the screening process more cost-efficient.

Jan-Patrick Haikkola has worked for the KPMG Global Strategy Group since April 2017, and has recently worked on several projects related to private equity. He has advisory experience in growth and deal strategies and M&A. In his free time, Jan-Patrick enjoys watching football (even though watching Arsenal at the moment is not the most enjoyable pastime!), and jogging.

Why flexibility is critical when planning an operations strategy

Operational excellence can only be achieved if a robust operations strategy is in place – a strategy that truly integrates an organization’s people, processes and systems. One of the more difficult aspects is how to plan for flexibility. Better responsiveness enables both savings and sales opportunities.

Under ideal conditions, developing an efficient operations strategy would be relatively easy. However, in the real world, operations managers and business owners face many challenges, including the need to plan for different flexibility aspects and options. Typically, operations frameworks fail to sufficiently address the challenges that arise when creating an operations strategy.
One major challenge that operations managers need to deal with when developing an operations strategy is balancing cost, quality and time. A typical operational framework requires operating costs to be kept as low as possible, or at least on a par with, or lower than, those of its competitors. However, operations managers must simultaneously ensure that quality standards remain high and at a consistent level, and that delivery and development speeds are also at optimum levels.

What about Flexibility?

Operations managers should, to a much greater extent, include flexibility as a key component when developing their operations and manufacturing strategies. Flexibility is costly, but allows a business to respond effectively and efficiently to fluctuations from the norm. In fact, many studies have shown the beneficial impact an operations strategy can have on performance, provided flexibility is included in the strategy.

Most managers consider flexibility to be a complex process. This is because of the lack of generally accepted definitions and concepts relating to operational flexibility. However, in the context of developing an operations strategy, flexibility refers to certain key elements. These may include:

– Flexibility in coping with incoming materials of varying quality levels
– Flexibility in satisfying the market demand for products of varying quality levels
– Flexibility in competing against new products introduced by competitors
– Flexibility in modifying existing products
– Flexibility in changing delivery and development schedules
– Flexibility in accepting demand volumes of varying levels
– Flexibility in making changes to the product mix
– Flexibility in coping with changes to the resource mix

In my opinion, technology and costs sometimes play too large a part in the overall strategy, especially because they fail to sufficiently emphasize the value of superior outsourcing partners, flexibility in external operations, and the mission to cut overall lead times.

For example, one leading company looked at end-customer behavior to better understand the impact of the demand pattern on the supply chain. Another company in Finland measured their “micro-flexibility”, i.e. how rapidly their manufacturing process responded in real-time when a truck arrived late, a machine went off-line, or an unexpected order came in. This has created real savings and extra sales for the company.

The above-mentioned challenges can easily be overcome. With the right tools and methodologies, realistic planning and smart people, any organization can improve their operational flexibility.

Berndt Wickholm is a director in KPMG’s Global Strategy Group enhancing performance in Strategic and Operational areas in a wide array of industries. He has 18 years of international experience in Strategy execution and supply-chain consulting. Offline, Berndt is a foodie, spending time in the kitchen and balancing with a bit of snowboarding and golf.

Releasing cash from inventories never runs out of fashion!

This is a claim I dare make after having had the privilege to work with leading global corporations in Europe, the Middle East and Asia on numerous inventory reduction initiatives for about two decades. Cash release through inventory reduction has been used to finance growth, repay debt, reduce capital restraints or pay shareholders, and has long remained a priority issue on the executive agenda. In speeding up the cash conversion of companies, I have found that releasing cash from inventories has been a fascinating, challenging and rewarding task!

Inventory Management

Everyone in the supply chain benefits from releasing cash!

In many cases, carrying inventories is an essential part of providing a service as raw materials, semi-finished or finished goods, at the supplier’s or at own site, in transit, or at the customer’s site. But, irrespective of who owns the inventory and who carries the inventory-related risks, all parties in the supply chain will benefit from not tying up excess cash in inventories at any stage. The key questions are how to optimise inventory levels throughout the supply chain, and how to collaborate for mutual benefit.

We can be both high on service and low on inventories!

Although there is a trade-off between product availability and inventory size, the risk of losing sales is all too often accepted as justification for failing to permanently reduce inventories. It is not either high service level, or low inventory levels, it can be both!

Inventory level is a result, not a parameter!

A common misconception is that we can meet the challenge of maintaining good service with proper inventory levels only by finding the right parameters. We certainly need parameters for managing inventories, but we must first understand the factors that drive inventory levels up or down.

For companies producing and selling goods business-to-business, answering the questions below will reveal the main factors driving inventory levels.

Service – What is the service we offer to customers? What is our product assortment? What availability guarantees, limitations and service levels do we have? What is the lead time? What is the customer demand, and how does it vary?

Steering the supply chain – How do we steer production in terms of batches and production cycles? How do we schedule inbound and outbound transports? What variability do we have in supply? How are cycles and schedules synchronised?

Structure of the supply chain – How are our resources spread, and how are they located in relation to suppliers and customers?

Reliability and trust – How reliable is the supply chain’s deliverability? Do customers trust our delivery dates? Does our sales & operations planning trust customer forecasts? Does our production trust the delivery dates given by sales? Do we trust suppliers to deliver on time and in full?

Rightsizing inventories is always worth the effort!

In my years of engaging with clients, I have experienced inventory reductions of a third, or even more. In each case, the key has been to identify the underlying factors driving the inventory levels, and to impact them systematically and persistently. This has resulted in released cash, improved service, lower inventory costs, and significantly lower risks of damage and obsoletion.

Anders Hahnsson is a Director in the KPMG Global Strategy Group (GSG). He has long experience of supporting clients in both their strategic aspirations and operational development. Anders has mainly worked with industrial manufacturing companies in steel, pulp & paper, chemical and engineering works. Besides spending time with his family, Anders enjoys the Finnish archipelago, alpine skiing and long distance running.

Strategy implementation requires… Communication!

When translating an overall business strategy into operational changes, and instilling ownership of the strategic pursuit throughout a company, one’s got to communicate properly. In this blog I’d like to list some key pointers on how to create and deliver such communication.


Get the message right

Ensure it resonates with your employees
According to research, to be successful, a person’s level of grit is more important than talent. The two underlying components of grit are purpose and perseverance. In my view, this is also valid for successful companies. At its core, purpose is the idea that what we do matters to other people. A company’s purpose – its impact on the lives of whomever it tries to serve ─ should be ”felt”. Through communication, employees should get a sense of alignment with their company’s purpose, in order to enable the changes that are being pursued. A great example is the Kellogg company purpose: ”Nourishing families so they can flourish and thrive”.

Utilize tools for structuring your message
The pyramid principle (Barbara Minto) ─ a classic in consulting ─ can help you ensure your message has a solid structure. Through structured messaging it will be easier for the recipient to follow your reasoning. In the case of presentations, storyboarding can improve the efficiency of your efforts. Joint meetings and the use of whiteboards in which key messages and supporting arguments (presented in words and graphs) are discussed, will give you a head start in knowing how to build your content and will highlight potential gaps in your logic.

Utilize different platforms
Different individuals have different preferences regarding the consumption of information. Even though official channels must be used when a strategy is ready for company-wide communication, other small efforts will also go a long way. For example, if an employee is writing an internal blog – ask her/him to relate part of the story to the overall strategy.

Deliver your message

Know when to communicate what
The timing of communication matters. For example, if cost cutting is required, it may cause alarm among employees. In this case, sensitively timed announcements of actions to be taken to help weather the storm are crucial – especially if the aim is to create understanding and acceptance of lay-offs. Nor is it a good idea to give ‘bad news’ on a Friday or just prior to a holiday period.

Be flexible and willing to listen
Although strategy messages should be well-structured and logical, these are not the only important criteria. Dialogue and flexibility are just as crucial, if you want to help a strategy start ’living’ within your firm. Make sure that co-workers can participate in guided discussions on how the strategy could affect daily work. If the outcomes of such sessions have slightly tweaked parts of the strategy, these can be used as ”stories” which help employees take ownership of the ideas expressed. And when employees sense they are able to influence the company’s strategy they are much more motivated to work on its pursuit. This will also validate the company’s purpose and your employees’ alignment with it.

Henk-Jan Kruit works as a Strategy and Operations Advisor in the KPMG Global Strategy Group. He has advised organizations in manufacturing and service industries for over 10 years, for example in Gross margin improvements, Sales & Operations Planning, Lean Six Sigma implementation, Integration management, Value Chain management and Strategy development. In his leisure time Henk-Jan enjoys spending time with family and friends and releasing energy through sports like snowboarding, cycling and swimming.

Grasp value during the deal life cycle

High valuations and competition for good deals pushes private equity houses to emphasise  operational improvements in portfolio companies as their investment thesis.

private equity

High valuations

A prolonged period of expansionary monetary policy and historically low interest rates has produced a situation where large amounts of money are seeking returns. This has caused institutional investors, such as pension funds, to shift their focus to alternatives, like private equity. The allocation of capital to PE is thus at an all-time high, according to Forbes, and the same has been visible in Nordic fundraising as well. The money in search of good targets has led to higher valuation multiples, so that private equity houses are facing a challenge as they seek to continue to outperform other asset classes in even more demanding circumstances.

Tracing, finding and exploiting levers before and during an ownership period

The tough competition means that PE houses must, to an ever-increasing extent, be quicker to find and execute potential deals where they can unlock value. If any PE house underestimates the potential of an investment case, there will always be another that will value the opportunity more highly and acquire the asset. On the other hand, overestimating a potential deal will erode the value of the investment right from the beginning. Solving this dilemma may require co-operation with advisors, such as KPMG, that can provide support in creating a comprehensive strategy for the entire holding period of a portfolio company.

An integrated Due Diligence is a good way to quantify the opportunities in a holistic manner. Financial Due Diligence secures a reliable baseline for operations, Commercial Due Diligence describes the available market opportunities and risks, while Operational Due Diligence demonstrates the operational efficiency-enhancement opportunities, together with the implementation requirements.

KPMG’s Target Value Platform (TVP) tool quantifies operational improvement opportunities at deal speed

KPMG has developed a set of new agile tools for the more systematic identification of value creation possibilities in transactions. One of them, that could be described as an express version of a traditional Operational Due Diligence can, for instance, be delivered in a week.

The TVP is an interactive tool that identifies unleashed operational potential in a target and quantifies its value. A rapid TVP scan leverages benchmarks across several opportunity areas within cash improvement, revenue upside, cost reduction and the maturity of operations. The benchmarks are based on publically available data inputs, combined with proprietary knowledge that KPMG has collected through years of conducting engagements. The visual and adjustable deliveries facilitate discussion and can serve as a template for a 1,000-day ownership plan, including an implementation roadmap. The awareness of operational upsides should be raised, along with red flags, at an early stage of the due diligence process. With the TVP, that can be done cost-efficiently, and at deal speed.


Paulus Roiha has worked for 2+ years in KPMG’s Global Strategy Group. He has experience of several transactions and projects related to strategy and operations. Before enrolling to consulting, Paulus played football in the top flights of five different countries and represented Finland for 20 times. In his spare time, Paulus enjoys good food and all kinds of sports both as a participant (from skiing to padel tennis) and a spectator (from biathlon to American football).

Three challenges Finnish companies commonly face in post-merger integrations

Mergers and acquisitions are key initiatives of the highest priority for companies. In order to successfully achieve the set targets of an acquisition, serious effort needs to be put on the post-merger integration.

The KPMG Global Strategy Group Finland has conducted a study on Finnish companies’ post-merger integration performance. In total, 62 companies were interviewed regarding a chosen post-merger integration undertaken in the last 5 years.

Three challenges that companies need to address properly

Although companies generally rate themselves as having been moderately successful in integration projects, most seem to struggle with the same kinds of challenges:

– Align company culture. Obviously, cultural differences can arise in acquisitions where the target company is located abroad. But cultural differences should not be underestimated in domestic acquisitions either, since such differences can stem from factors such as different ownership (private, state or PE ownership), different maturities (old established vs newly started company) or different histories (e.g. competitor vs non-competitor). Aligning company culture is imperative in order to successfully merge two companies into one and achieve the targets of the deal.

– Communicate internally. Acquisitions usually cause uncertainties for employees within both the buyer and target companies. Therefore, open and frequent communication is vital in order to reduce any uncertainties and false rumors. When communicating, one should focus on how the message is delivered, and on ensuring that everyone gets the same message and that any chance of misunderstanding is minimized.

– Plan the integration process in advance. Integration planning should start as early as in the due diligence phase. Critical issues should be identified and addressed so that, when the deal is closed, integration can start right away with high momentum. Of course, not everything can be planned in advance, and therefore clear roles and responsibilities should be defined in order to handle upcoming issues efficiently. A well-prepared integration plan is critical in order to complete the integration process on schedule.

This is not to disparage the importance of addressing other issues in PMIs but success in handling these three particular challenges will play a vital role in ensuring a favorable outcome for your integration and in realizing the benefits of the acquisition. Therefore, if the needed resources or skills cannot be found in-house, companies should consider the use of external support.

More detailed analysis of how well Finnish companies have performed in their integration projects can be read in KPMG’s report.

Klas Holmberg is Senior Associate at the KPMG Global Strategy Group (GSG) with experience in operations management with clients in e.g. transportation, food & beverages and process industries.

Data & Analytics as an integral part of today’s business

Are the D&A capabilities of Finnish companies sufficient? I claim they are far from it, and the “Building Trust in Analytics” survey commissioned by KPMG may support this statement.  From a strategic and efficiency-enhancing perspective, it may be worthwhile to have a look at what D&A has to offer your company.

data & analytics

The Building Trust in Analytics survey was carried out in 10 countries on all continents, and the 2165 respondents were all directors and C-level executives fully or partly responsible for data & analytics. Although the majority of companies interviewed for the survey deem D&A important for their businesses, only 34% are confident in the business operations insights generated by using D&A. Furthermore, just 21% trust the analysis/modelling they conduct. I find these numbers somewhat incomprehensible, and I’m left wondering why the trust in D&A is so low, regardless of its widely recognized significance. One possible reason is inadequate competence, combined with outdated and unsuitable tools.

D&A provides a myriad of possibilities

I’ve personally participated in projects focusing on cost and process efficiency, where D&A has been utilized and even heavily relied on. Even though I was familiar with D&A prior to joining KPMG, I’ve been astonished by the vastness of its application possibilities, as it can be applied within virtually any activity where data is available.  The only limits are essentially your own creativity and skills and the features of the software you’re using. More often than not, the finiteness of the software isn’t an issue.

So why not invest in D&A?

As the survey presented above does not include Finnish companies, it isn’t an indication of the D&A capabilities in them. Be that as it may, I know from personal experience that the use of a few Excel spreadsheets is still the most advanced form of “D&A” in many Finnish companies. Obviously I’m generalizing, but the truth is that I’m yet to be blown away by the D&A skills of a Finnish company!

Upgrading your D&A is surprisingly easy

Taking your D&A to the next level, so to speak, can be anything but cumbersome, and not quite the nuisance you might think. Licenses for extract, transform & load tools aren’t all that expensive, and some ETL and business intelligence software is even available for free. Using them is generally not all that tricky, and with just a bit of practice and the will to learn, you can make impressive visuals and save time with smart commands in your ETL software.

I’m very much inclined to recommend the use of D&A. There are clear efficiency-related upsides, as well as numerous other benefits, and the use of D&A in companies will most likely increase exponentially in the future. So, why not invest in D&A in the form of proper tools and skilled employees? We’ll be happy to help you, and you’ll most likely thank yourself for it later.


I am Erik Mustonen, a member of the KPMG Global Strategy Group. Ever since I was little, I’ve been interested in numbers and calculus. D&A is, in a way, another outlet for my passion for numeric analysis, and an exciting means to explore and learn new things. At KPMG I’ve been fortunate to be involved in D&A-related assignments. KPMG has clearly made progress within the field and a strong D&A community has developed here, which I’m happy to be part of.