CASE STUDY: RAPID BUSINESS ASSESSMENT & FIT FOR PURPOSE CONTROLS

OVERVIEW

A Private Equity group needed a repeatable method to assess its existing portfolio of businesses and potential acquisitions. The assessment needed to be robust, applicable to businesses across a variety of industries, and focused on rapidly identifying priority actions.

SERVICES PROVIDED BY CROSS 8

Cross 8 deployed our Business Assurance Tool, a comprehensive framework that evaluates tangible controls such as processes and procedures, RACIs, DoAs KPIs; and intangibles including the organisation’s structure, decision-making processes, and key personnel risks. Following an initial 3-week assessment of their flagship business, we rolled out the same methodology across 6 of their existing businesses and acquisition targets, in multiple sectors.

KEY THEMES

  • Rapid identification of high-impact recommendations
  • Operating in highly sensitive commercial and human resources environments
  • Building action-based plans for conditional-acquisition and recovery plans for existing businesses
  • Intelligent planning – Prioritising changes against operational business and the existing change landscape

THE CLIENT

The UK arm of an offshore Private Equity group with c. £1bn to invest.

THE CHALLENGE

After a period of rapid acquisition our client faced two challenges, implementing robust controls in the businesses they had bought without disrupting the ongoing operation; and developing a repeatable process to evaluate the suitability of future UK businesses for investment.

OUR APPROACH

We conducted a comprehensive review of the client’s first acquisition using Cross 8’s Business Assurance Tool. This tool can be used to rapidly evaluate the maturity of six core elements that are common to any business or organisation:

  • People
  • Structure
  • Governance
  • Technology
  • Process
  • Data

Beneath these elements are nineteen sub-components; the assurance tool follows a structured methodology to assess each of them against pre-defined criteria. Together, they give a comprehensive picture of the health of a business and identify areas for improvement. Next, we carried out a Qualitative Assessment, doing a deep dive into the organisation’s intangible elements, including:

  • Its structure
  • The clarity of decision-making; and
  • Key personnel risks, such as dependency, suitability, and succession planning.

The assessment of these intangible elements involved a mix of interviews, informal observations, and maturity assessments as deemed appropriate. Finally, we produced a comprehensive, easily understandable set of Business Maturity and Transformation Reports concentrating on pragmatic, action-based recommendations. The Business Maturity report focused on the assessment’s findings, providing a clear baseline of the current state. It identified strengths which may have been underutilised and weaknesses which need to be addressed. Where opportunities for improvement were identified, we recommended 9 targeted enhancements, applying just enough change to ensure the business was future-proof, while avoiding change overload.

To help with this we developed a Change Heatmap, calling out the pinch-points in the business due to ongoing changes and BAU work, and overlaying the potential impact of our key recommendations. All of this then fed into a Plan On a Page which gave a clear roadmap to implement the improvements. The assessment was made up of three key steps: First, we conducted a Quantitative Assessment, scrutinising the tangible controls, such as the company strategy and board documentation, formal Delegations of Authority, KPIs, measurement frameworks, and the operational controls like policies, processes, and procedures.  These tangible controls were reviewed for their presence, quality, and the extent to which they were followed within the organisation.

The results

The Cross 8 team presented the findings to the boards of the business and the Private Equity group, and both parties signed off on the recommendations. Since our client had ambitious goals to propel the business to the next stage of growth and make it a leader in its field, one of the key themes throughout the report was ensuring that the right type and level of controls were in place. As a result, the business has implemented:

  • A new Risk Management culture and intelligent escalation processes – ensuring senior leadership attention from both businesses is focused where it is most needed
  • Clear standardisation and documentation of 119 core operating processes – providing stability and scalability
  • A governance model that pushes decision-making to the right level in the organisation – allowing rapid decisions with fit-for-purpose control
  • Business performance monitoring Including goals, metrics and targets – ensuring the business is aligned from top to bottom

Implementing these targeted controls has positioned the flagship business for robust growth, and kept its existing strengths of agility and flexibility to respond to a fast-moving market.

Conclusion

A rigorous assessment of your business does not need to take a long time or lead to one-size-fits-all governance models. The key is to use a structured, easy-to-follow methodology, and to set the criteria to be measured against in advance. By taking a dispassionate look at your business, you can position yourself for success in the next phase of growth.

To find out more about Cross 8, sign up for our newsletter or download a copy of our framework here – X8 Perform Framework v1 (4)