It’s well known that private equity firms work at an extremely fast pace. They need to act quickly to meet their objectives as they acquire, reengineer, relaunch, and divest companies. Modernizing legacy technology in target companies can slow this process. What’s more, when private equity stakeholders are not themselves technology experts, they may underestimate or misjudge technical issues, inadvertently exposing their firms to risk. They may also find it challenging to find a collaborative technology partner to take care of technical concerns at their momentum while shielding them from the everyday details of technology management. However, by partnering with Sikich, private equity companies can more easily transform their portfolio companies to be more productive and competitive.
Sikich connected with a private equity firm that focuses on consumer-packaged goods. The organization has ambitious goals for advancing the industry and providing a higher service quality to customers. As part of its investment strategy, it streamlines and modernizes the processes and systems of target companies and refocuses them on the best value-driving opportunities.
This firm had acquired several companies that were under one corporate umbrella. Each business had its own, unique business processes and ERP systems. The firm wanted to standardize processes and business management software to foster the growth and streamline the management of its portfolio companies. Sikich was one of several technology consultancies the firm invited to share its expertise.
The Sikich team met with the private equity stakeholders to learn about their goals for the recent acquisition. The firm’s managing director for the manufacturing industry comments, “It was remarkable how the Sikich consultants answered many of our questions even before we had voiced them. They obviously knew how a private equity firm like ours works and understood what mattered to the meeting participants.”
The initial conversation progressed rapidly from getting to know one another to discussing the tax implications of upcoming investments and technology modernizations. At a high level, it already addressed the concerns of the executives and key business roles in the private equity organization as well as in the companies in which it invests.
“We realized that Sikich had a wealth of manufacturing and technical expertise in addition to understanding the world of private equity,” the managing director adds.
“They asked insightful questions and focused on what technology can help a business accomplish. We had confidence that we could trust Sikich, so we brought them on for this project.”
The recently acquired portfolio companies ran on three different ERP systems—Microsoft Dynamics AX, Microsoft Dynamics NAV, and Infor. When Sikich consultants reviewed their processes and technology environments, they found that the company using Dynamics AX was the one that ran most efficiently and used the most powerful, versatile, and scalable software. The firm realized that standardizing on this company’s processes and Dynamics AX (now Dynamics 365 Finance and Supply Chain Management) was the most efficient way to help the manufacturers in this group improve operations, deliver superior customer experiences, and introduce product innovations.
The client decided that the first project would be moving one of the companies using Microsoft Dynamics NAV to the more powerful ERP system. One of the first steps Sikich took was connecting with IT managers and outside consultants who had so far been responsible for the company’s systems before organizational changes might result in the loss of important knowledge. This was critical in order to gain access to code, data sources, and other business systems, and to fully understand the details of business processes that would be impacted by the technology change. Sikich helped strategize the retention of key team members and the timing of the companywide announcement at the beginning of the engagement.
The first ERP project involved several data migrations, which Sikich planned together with managers in the business groups that relied on the information. The company also wanted to implement electronic document interchange (EDI) communications to simplify interactions and processes with its trading partners. Sikich accomplished that by implementing a vetted solution from an EDI partner and integrating it with the ERP system. The EDI Partner also provided expert assistance during the project and helped ensure key milestones happened as they should. Other partners and their software products augment the Microsoft Dynamics solution with specific capabilities the manufacturer needed, including pallet tracking, promotions management, demand planning, and accounts payable automation. Working closely with Sikich, such partners always adapt to the schedules set by Sikich project managers, minimizing delays to deliver a comprehensive solution efficiently.
Following conference room pilots, user acceptance testing, and a rehearsal go-live event, the company went live on its new ERP system. Working at an accelerated pace, Sikich took just under seven months to complete the project.
The CFO of the group of portfolio companies acquired by the private equity firm says, “Sikich delivered the best ERP implementation we have seen in our history. We went live on time and on budget. By the end of the same day, we already had processed orders, shipped products, and invoiced our customers without any issues.”
Following this successful ERP project, the private equity firm asked Sikich to scope the next effort, which would transition the company using Infor to Microsoft Dynamics ERP. As the collaboration grew, stakeholders in the firm learned more about how Sikich performs Microsoft Dynamics 365 deployments, using its proprietary HEADSTART methodology to accelerate and simplify the projects. HEADSTART is a standardized, working model of the ERP system that includes thousands of preconfigured, optimized business processes for industries, including manufacturing and distribution. The company needed to make only minimal process changes to accommodate the HEADSTART model, which has been proven effective in hundreds of successful manufacturing ERP and other projects. A partner in the private equity company says, “We can let Sikich run complex, transformative software projects together with all the organizational change management and communications they require. They effectively shield us from having to be closely involved with the day-to-day events of technical projects, so we can focus on strategic efforts.”
The private equity team also saw further opportunities for the Sikich collaboration—including bringing in Sikich experts before making a final decision regarding a potential acquisition. Soon, Sikich was performing high-level assessments of the maturity and health of companies’ IT environments and advising the private equity client regarding the possible risks and challenges they might face. One of the firm’s principals says, “The sound judgment and recommendations of the Sikich team have quickly become an invaluable component of our acquisitions and risk management. They help us understand the real value and true costs of possible investments under review and make the best decisions about them.”
Recently, the private equity firm asked Sikich to assess the systems and technological conditions at a manufacturer that was about to be spun off by its parent company. When the private equity organization and the parent company negotiated a transition services agreement (TSA) with a one-year runtime, Sikich stepped in to make this work from a technology perspective. As the subsidiary becomes an independent entity, it leaves behind the corporate SAP system as well as all other business technologies. For this company, Sikich is already preparing a deployment of Microsoft Dynamics 365 in the cloud.
At the same time, Sikich consulting and services teams are working with the manufacturer’s procurement and IT departments to help select and source networking, productivity, collaboration, telephony, and other software and hardware products. From internet connectivity and firewalls to servers, storage, and client computing, Sikich experts will be installing and configuring the technologies that enable people and teams to work productively.
As a subsidiary organization, the manufacturer lacked a brand identity and domain of its own. That’s why—in a third, parallel undertaking—Sikich consultants are also collaborating with company leadership and IT to create a strong brand identity and set it on a firm technological foundation. Sikich will help the company establish its own internet domain and will also build a modern website with optimizations for ecommerce.
The private equity firm is in conversations with Sikich to expand the collaboration even more. In the future, the Sikich technology consulting and business advisory organizations together may also engage with this client. That means the resources and expertise of the Sikich transactions advisory services (TAS) team could play an increasingly important role as the private equity company evaluates investments and prepares TSAs. The managing director notes, “In structuring TSAs, we might face potential risks and challenges when it comes to managing and transitioning data and modernizing business management systems and infrastructures. Sikich has already helped us avoid errors and proactively mitigate risks that could have been troublesome.”
The Sikich TAS team will not only help the private equity firm ensure due diligence in reviewing the conditions at target companies, but also handle many of the logistical and legal steps that need to happen within a transaction.
“Sikich proved that it understands our industry and objectives, speaks our language, and fulfills its commitments and promises,” the principal comments. “We are delighted to have them working alongside us as trusted, highly valued advisors.”
Sikich is committed to the success of private equity companies and their portfolio companies. We can match your momentum with resources and expertise to help you deliver value and reach your objectives on your schedule. Here are nine facts to consider as you think about Sikich as a potential technology partner.
A single point of contact for
all technical and business
consulting needs
Transaction Advisory Services team available to help
manage the details of private
equity transactions
Ability to engage quickly
and flexibly
Outcome-driven, predictable
approach to optimizing processes
and performing fast software deployments
Proven track record and rich
expertise in private equity and
industry verticals such as
manufacturing, distribution,
and life sciences
Empathetic, collaborative,
empowering business
culture
Wide range of technology services, including virtual CIO, procurement assistance, pre-deployment scoping, implementation, modernization and consolidation, need-based support, outsourced IT management,
integration, and data migration
Large menu of business services comprising valuations, forensic accounting, brand and domain
building, marketing and
communications, risk and viability assessments, system and process
health checks, succession planning,
and human capital management
Large portfolio of widely adopted business software solutions from some of the industry’s leading innovators, including Microsoft Dynamics, Microsoft 365, NetSuite, and Salesforce
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