Seamless Portfolio Company Analysis Helps PE Client Improve Financial Performance Amid COVID-19 Outbreak
Our client, a private equity firm focused on the food & beverage industry, wanted to understand the impact of the COVID-19 shutdown on its portfolio companies. The client sought to analyze the implications of reduced footfall, irregular timings, and labor costs on its bottom line.
Evalueserve developed a holistic solution to address the key challenges faced by the client during the COVID-19 lockdown as well as a framework to follow once the economy stabilizes.
We used a two-step approach for the project:
- Data analysis: The client’s portfolio companies assess profitability on the basis of sales and labor costs incurred in 15-minute slots throughout the day. Therefore, the Evalueserve team compiled all the raw financial data into a structured model to compare sales within 15-minute intervals for each day. We also ascertained recurring daily customer footfall patterns and identified time slots in which costs exceeded sales.
- Scenario analysis matrix: Following the initial analysis, we determined the impact of reduced business hours on daily net profit. We created a scenario analysis matrix depicting multiple store opening and closing times, along with the margin percentage and the dollar value impact on profit levels.
Scalability: With this model, we were able to apply the analysis across various situations. We ran multiple timings and days of the week through the model and ensured replicability for other similar scenarios.
- Quick solutions to stabilize profitability: Through continuous portfolio tracking, we were able to monitor the performance of each company on a daily and weekly basis. These reports enabled the client to closely track the impact of the shutdown, enabling them to quickly seek for a solution to the outbreak-induced decline in profitability.
- Immediate cost savings: Closer investigation of portfolio company financials helped our team identify the “slack periods” holding potential cost savings for the client.
- Improved financial performance: Our assessment of cost savings enabled the client to improve the company and portfolio performance in times of drastic economic duress.
The short turnaround time of our portfolio assessment in this rapidly changing environment enabled the client to take timely action to maintain the profitability level
Up to 10 % labor cost savings
Through our earning analysis, the client achieved labor cost savings for each portfolio company
4% cost savings at the portfolio level
Our holistic solution led the client to achieve cost savings at the portfolio level in just 7 days