Finding and executing the right deal is important, but what happens after the deal closes is equally—if not more—important. McKinsey was the first to use research to demonstrate that a critical element of value creation in companies owned by financial sponsors is “active ownership”—that is, taking an active role in the management of the company (vs. a “hands-off” approach).
We help improve portfolio company performance by:
Executing a 100-day plan
A well-targeted value capture plan executed during the first 100 days after closure can have a significant impact on the success of a transaction. McKinsey delivers end-to-end development and execution support of 100-day programs to create value. Our offering targets all functional levers, identifies quick wins and longer-term improvement needs, and provides a transformation strategy with prioritized initiatives, implementation plans and responsibilities, and Key Performance Indicators (KPIs).
A 100-day plan, which is done at both a high and detailed level, typically covers six essential elements:
- Strategy—what to do
- Value capture—how to do it
- Governance and organization—who to manage what
- Business continuity—how to limit disruption
- Alignment and mobilization—how to gain momentum
- Project management—how to ensure efficient implementation
Improving capabilities
We help investors drive value in their portfolio by transforming the functional performance of portfolio companies in high-impact areas such as pricing and sales force effectiveness. Not only do we draw on McKinsey’s unmatched functional expertise, but we also tailor our offering to the needs of investor-owned companies. This approach delivers value over shorter time horizons, stronger links between investments and returns, and prioritization based on exit strategies.
Our functional capabilities include: strategy, organization, marketing, sales, operations, and IT.
Strategy
We help portfolio companies define and implement business strategies that enable them to grow, globalize, or simply compete successfully in today’s difficult economic environment.
The most common, high-impact issues for portfolio companies include:
- Strategy building
- Growth strategy
- Strategic re-positioning
- Go-to-market strategies for new products and services
In one example, we worked with a PE-owned manufacturer of agricultural machinery to develop a new, detailed business strategy along with the required improvements and implementation requirements. To do so, the team examined the current governance model, manufacturing footprint, purchasing, go-to-market model, product-development process, quality management, supply chain, and management information systems.
Read more about the firm's Strategy Practice.
Organization
We help portfolio companies build their organizations in primarily two ways:
- Optimizing organization structure, internal processes, and corporate governance
- Defining the appropriate roles and building capabilities to improve business performance and enable value creation
Common high impact issues for portfolio companies include:
- Organizational health diagnostics and treatment
- Organization redesign/restructuring
- Capability building
In one example of a client engagement, we helped a PE-owned wholesale retailer redesign its organization to be prepared for future growth and expansion to adjacent countries. Our work included defining the overall organization structure, key roles and linked responsibilities, key performance indicators for each role, and implementation of monitoring processes
Read more about the firm's Organization Practice.
Marketing & Sales
We help portfolio companies achieve commercial excellence by leveraging our set of proprietary diagnostic tools that quickly access and evaluate all commercial areas.
Common high impact issues for portfolio companies include:
- Pricing
- Marketing ROI
- Sales force effectiveness
- Channel effectiveness
- Micro market growth
In one example, we worked with a PE-owned building materials manufacturer to set up a marketing and sales transformation plan that addressed performance along 3 dimensions: pricing, sales force effectiveness, and resource allocation.
Read more about the firm's Marketing & Sales Practice.
Operations
We support our clients who strive to achieve operational excellence through optimizing their product development, manufacturing processes, procurement, and supply chain function. Our set of proprietary diagnostic tools quickly assesses and evaluates all relevant operational levers.
Common high impact topics for portfolio companies include:
- Procurement
- Lean manufacturing
- Supply chain
- Design to value
- Lean engineering
In one example we helped a Sovereign Wealth Fund reduce the operations costs of one of its banking portfolio companies by 15 percent through sustainable initiatives, as well as restructure the organization to improve efficiency and effectiveness.
Read more about the firm's Operations Practice.
IT support functions
McKinsey has a broad set of capabilities to help clients enhance their support functions. Common high impact topics for portfolio companies include:
- IT strategy
- Lean IT
- IT outsourcing and offshoring
In one example, we identified opportunities to reduce costs and improve quality, flexibility, and time-to-market by optimizing IT sourcing for a Mediterranean investor owned telecommunications operator. This improvement occurred primarily through outsourcing and offshoring.
Read more about the firm's Business Technology Practice.