How Portfolio Companies Can Drive Value Through Technology Transformation

In today's deal market, private equity firms are increasingly focusing on asset valuations through technology transformation initiatives. This strategic shift aims to boost exit multiples upon sale, making technology a critical lever for value creation.

The private equity perspective

Private equity firms are turning to technology to enhance asset valuations. By implementing comprehensive technology strategies, they aim to increase exit multiples and achieve higher returns on investment. This approach not only drives operational efficiencies but also positions portfolio companies for sustainable growth.

The portco perspective

Portfolio companies that align technology strategies with business goals and the overall investment thesis tend to outperform their peers. These companies often sell at higher multiples and achieve improved EBITDA. A clear technology roadmap is essential for every tech initiative to support the broader business objectives.

The roadmap for technology-driven growth

Comprehensive technology strategy:

• Align technology initiatives with the overall business strategy
• Involve the entire C-suite for a holistic approach
• Focus on cost containment and flexibility to adapt to future growth

Portco speed rounds:

• Conduct regular reviews to assess the progress of technology initiatives
• Adjust strategies as needed to stay aligned with business goals

Continuous improvement mindset:

• Foster a culture of innovation and improvement
• Encourage ongoing evaluation and enhancement of technology solutions

How CLA can help portfolio companies with technology transformation 

CLA can help portfolio companies prioritize technology transformation. This involves adopting a continuous improvement mindset, seeking further innovation and enhancement of opportunities. By ingraining this approach into the company culture, high-performing companies can differentiate themselves from the rest.