The First 100 Days

The Closing Process is All-Consuming

The closing process is so all-consuming that tunnel vision can set in. During the transaction, fund professionals and management often do not have the bandwidth to focus sufficiently on the detailed goals they need to accomplish in order to fulfill the investment theses. At the Roundtable, a number of participants reinforced the idea that the period immediately following closing (the conceptual “first 100 days”) is when you really find out “What did you buy? What are the issues that you didn’t see pre-closing?” The sale process, transition, and closing can take so much attention and energy out of the management team that, post-close, they will just want to get back into the day-to-day operations of their business.

A substantive, collaborative session after closing is critical. Management and sponsors can coordinate goals, discuss additional resources, and generally establish clearer alignment on the growth plan for the upcoming holding period. What’s the best way to establish focus and alignment after the sale process?

Model the Business on How it Actually Runs

In the course of the “first 100 days,” sponsors have the opportunity to build a more intricate knowledge of the business. Through an intimate dialogue with management, the sponsor develops a clearer picture of the processes and people providing visibility into the business. Sponsors need to evaluate the comprehensiveness of the regular reports generated by the company. During the “first 100 days,” sponsors examine whether management’s regular reporting packages capture the true causal factors underlying sales and profitability trends or just the symptoms. For example, is it more important to know how happy customers are overall (e.g. Net Promoter Score) than the percentage fluctuation in the latest month’s sales data?

Identification and agreement on the fundamental drivers of the business informs a more balanced conversation between management and sponsor, aligning strategy and tactics and enabling collaborative pursuit of mutual goals. What resources and expertise are available to management and ownership?

Management Needs to Own the Plan

In the course of a sale, management’s relationship and reporting focus shifts from the seller to the buyer. This shift presents an excellent opportunity to initiate a dialogue about the fundamentals of the growth plan, as well as the broader goals of the management-sponsor partnership.

Sponsors generally take the period immediately following the close to establish mutual expectations for information flow and goal execution, setting a cadence for the partnership. This phase is also crucial for determining any personnel or other resource gaps that might arise in implementing the strategy. The transition has been successful if sponsor and management emerge aligned in strategy and have established a pattern of open, constructive communication. Is the team in place going to take you forward through the build of the business and the exit?