Operational assessments are a tool to benchmark operating processes and procedures and identify improvement opportunities to increase performance and decrease risks. Cendrowski Corporate Advisors professionals can walk you through the complexities of the operational assessment process. Portfolio companies often benefit from an operational review because of the very nature of private equity deals.
- Many portfolio companies are in growth mode, and potentially could “outgrow” their controls. A company with five or six times their current annual sales will likely need to improve or replace their basic operating controls and systems, including financial, inventory, and product handling.
- Emerging portfolio companies may rely on “heroics” from a key employee or owner. As the organization matures, it is essential to operationalize their expertise to support future growth and opportunities.
- Some portfolio companies lack formalized controls. For example, they have no procedure documentation or manuals, just a staff who know how things have always been done. This makes it very difficult to introduce change in the organization. Worse, control lapses that increase risk to the organization may develop or go unnoticed by management.
- Families often desire enhanced reporting of financial and operational results to help monitor portfolio company operations.
- An operational assessment provides a detailed “road map” to family members or new management detailing the operations and financial processes of the business. This can help management get a jump start on enhancing the business operations.
- The operational assessment deliverables provide detailed reports of the portfolio company’s internal controls and other information essential for the due diligence process, should the family office decide to harvest the investment.
How an Operations Assessment Can Transform Your Organization
An operational assessment provides a structured approach to help the organization rapidly and efficiently identify improvements. Many portfolio companies are very lean, and do not have internal staff, time or expertise to assess operations and implement improvements. Additionally, it is often very difficult to make internal change in an organization, but an outside perspective from trusted advisors may be instrumental to your operations.
The deliverables for an operational assessment include detailed process descriptions, maps of control procedures and an explanation of why each is important.
AI helps diligence — until it doesn’t
AI is a great tool—but it’s not foolproof. It can speed up diligence, but you still have to verify every source and assumption. I’ve already seen major firms get burned by trusting AI outputs without review. Use it to enhance your process, not replace your judgment. That’s how you protect both your returns and your […]
Smart family offices keep leverage low for a reason
There’s a reason most family offices keep leverage low. After living through 2008–2010, many learned how quickly over-leverage can turn a paper fortune into a liquidity crisis. When capital calls come due and exits stall, debt becomes a liability you can’t unwind fast enough. Experienced investors know when to dial leverage up—or down—but for most, […]
Can’t hedge private stock? Here’s what family offices actually do
Roughly three-quarters of family offices are investing directly in private companies—and that creates a challenge: you can’t easily hedge private stock. The smart play? Hedge the debt, not the equity. Some offices also use structured lending against concentrated positions to manage downside risk while keeping some upside. Private markets don’t come with easy liquidity, […]