Business Challenge

Private equity-owned portfolio company was significantly underperforming versus price-earnings expectations. The PE goal for the company was 20%, which was the industry average, but they were tracking to an EBITDA goal of only 3%. The team was flailing to figure out the root cause and needed alignment, visibility and actionable data to see exactly what was preventing greater EBITDA, along with a detailed action plan for improvement.

Insights

The Eye-Openers

The primary diagnosis cut across 4 key themes that were big eye-openers:

Culture
Their culture was very traditional with limited performance orientation. On the other hand, their customers were highly performance-oriented. The company also learned key insights that pointed to a significant struggle with both internal and external communication, often leaving customers in the dark.
People
The staff was well-intentioned but lacked management depth and talent. There was also a sizable misalignment at the executive leadership team level.
Performance
The company was not organized to be competitive online, as they were traditionally organized around brick and mortar. The platform identified a number of opportunities for the business to capitalize on, such as inventory selection, order-to-delivery speed and customer service.
Financial
Operational inefficiencies due to a lack of ecommerce and business transformation held back profit margins and EBITDA.
The Outcomes
The Results are Clear

With the new solutions they were able to implement via the LEADERSCAPE® platform, the company realized:

  • EBITDA improvement jumped from 3 to 10% in first year
  • Order and shipping times were reduced by 40%
  • Online sales increased by 8%
  • Customer-centered, online restructuring improved experience and propelled sales and EBITDA jump
  • Dramatic improvement in overall organizational and executive alignment
  • Measurable transparency of internal and external communications brought customers into the fold