Abstract
This article details how a predictive risk model, combined with financial and legal deal structure and negotiation processes, will produce high-quality projects and secure cash flow, and can result in significant performance improvement of both margin and bottom-line earnings for private equity portfolio companies.
TOPICS: Private equity, risk management
Key Findings
▪ Portfolio margin improvement: Evidence shows that by scaling predictive analytics and harnessing data, a team of operational risk professionals can improve portfolio margins to the point where <1% operational losses on billion-dollar portfolios are achievable, resulting in direct portfolio margin improvement.
▪ Accelerated earnings: Private equity firms can quickly implement a five-part strategy for operational risk management focused on the sales and delivery lifecycle to accelerate earnings and create compounding growth annually across their portfolio companies.
▪ 99%+ earnings capture: By pairing an intelligent risk-sensing model with active deal and project intervention at the critical moment, it is possible to capture more than 99% of the revenue each year and drive it directly back into the business, positively impacting the value creation cycle.
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