Private company services advisory solutions

Building your next competitive advantage

Converging macroeconomic forces are impacting private companies as never before. The accompanying challenges are tremendous, but so too are the opportunities. This is evident from PwC's 15th Annual Global CEO Survey— nearly all CEOs of US private companies say they are confident they will see revenue growth, despite an uncertain outlook for the US and world economies:

  • Nearly 35% percent of US private-company CEOs plan to complete a cross-border merger or acquisition this year
  • Over half intend to enter into a new strategic alliance or joint venture
  • The majority of US private-company CEOs are aggressively pursuing innovation across all aspects of their business portfolio
  • Almost 75% plan to increase their technology investments

As private companies pursue these growth objectives, they will need to adapt their strategies to take advantage of emerging opportunities. For instance, expansion into new markets abroad will require that companies reconfigure operations at a very local level — taking a one-size-fits-all approach won't work. Other key issues of increasing importance to private companies include:

  • Effective risk response to enable better performance
  • Acquisitions/divestitures
  • Top-line growth and innovation
  • Supply-chain efficiency and effectiveness
  • Data reporting/analytics
  • IT transformation
  • Finance functional performance and/or transformation
  • Fraud/forensics/dispute resolution

Your evolving business needs require the latest thinking, as well as deep expertise in private-company issues. PwC’s Private Company Services (PCS) Advisory practice provides just that, helping our clients build their next competitive advantage — from strategy through execution.

For additional information on advisory services

Risk Consulting

Business Continuity Management (BCM)

Client Issue:

The client requested assistance in developing an enterprise-wide business continuity management (BCM) program. PwC followed its five-phase BCM methodology to determine the client’s critical functions, developing recovery strategies for each critical function, documenting business continuity, emergency response, and crisis management plans, and developed testing and maintenance procedures to promote the sustainability of the BCM program.

Benefits:

  • Business continuity governance structure including program manager, BCP team leaders, and a two-tiered crisis management team
  • Enhanced ability for the most critical functions to be able to respond to unexpected interruptions and recover operations in an organized and efficient way, minimizing the impact of a disruption to the company, its employees and its customers
  • Sustainable program with defined maintenance and testing procedures for the ongoing enhancement and development of the program

Enterprise-wide Risk Management (ERM)

Client Issue:

The client's ERM program had become inefficient over time and added little value to the organization. PwC was engaged to evaluate the existing ERM program against leading practices and implement solutions for improvement.

Benefits:

  • Improved program governance, accountability and ownership of risk management at all levels of the organization
  • Scalable and repeatable process built into strategic planning
  • Technology solution to automate the management of risk data and reporting
  • Collaboration between risk management team and internal audit to manage and monitor risks and controls
  • Shift from a process focus to a cultural focus on ERM as a crucial part of operations and as a tool to identify risks and opportunities

Pre- and Post-Merger Integration

Global Cosmetics Firm Acquisition of a Competitor

Client Issue:

The client sought assistance to assess and enhance their merger integration process during the acquisition of a competitor. The client planned to grow through acquisitions and engaged PwC to memorialize their integration process and supplement it with industry leading practices. The project outcome led to additional PwC assistance in providing project management support with another acquisition and proposal requests for PwC to develop a General Manager Framework and Due Diligence Playbook.

Benefits:

  • Customized integration playbook with supporting tools and templates fully developed and deployed
  • Individual integration guides for each functional team (16 total)
  • Functional integration leads fully trained on playbook integration guides
  • Post mortem analysis of target integration to date, including recommended opportunities for improvement on future acquisitions

Sustainable Cost Reduction

Client Issue:

A distributor of consumer products faced declining sales in five of its core brands and wanted to achieve a step change in G&A costs through a large-scale transformation. The leadership team needed support in evaluating various consolidation scenarios from an objective third-party, and lacked little depth in its mid-level management team to successfully execute the transformation. An additional complicating factor was a planned ERP system cutover that had to occur in conjunction with the consolidation. PwC was engaged to conduct a rapid assessment of the G&A costs, and presented/implemented a two phased consolidation approach.

Benefits:

  • G&A cost reductions of over 24% (improved bottom-line results were critical in an upcoming debt restructuring)
  • Strengthened leadership team
  • Implemented leading practices
  • Improved use of systems

Product Innovation and Development

New Product Development Transformation

Client Issue:

A computer systems supplier had a 40-50% product development cycle time disadvantage to its competitors and an informal unstructured prototype build process across its divisions. We conducted a diagnostic assessment of cycle time, processes, and project mappings. Formed cross-functional design teams to define the process structures. Piloted and improved project excellence capabilities created by the design teams.

Benefits:

  • Achieved a 36% reduction in prototype cycle time
  • ~200M in savings through productivity improvement and direct cost reduction
  • ~$30M improvement in revenue through improved customer satisfaction

Product Lifecycle Management

Client Issue:

A high-technology manufacturer had multiple data repositories, non-standardized parts and BOMs making it difficult to partner effectively with R&D co-development partners. PwC/PRTM merged data repositories, standardized parts/BOM creation, and streamlined processes for partners

Benefits:

  • On track to realize a $4-5.5M cost savings per 1,000 users
  • 10-15% reduction in time to market

Supply Chain/Operations

Supply chain transformation for a building materials company

Client Issue:

A leading building materials manufacturer and distributor was lagging the industry leader in its ability to cost-effectively meet the increasing demands of major retail customers. It also lagged in implementing an ERP and SCM software. Historical customer loyalty and pricing premiums were eroding. It’s large, complex supply chain was operated in a decentralized model and lacked coordinated planning for inventory distribution. The company was faced with volatility and price pressures.

PwC’s PRTM management consultants conducted a detailed supply chain benchmark and assessment, and developed the supply chain strategy and process and IT architecture. We redesigned and optimized the manufacturing and network distribution, identified and planned new strategic distribution centers, realigned production and redesigned the manufacturing plant organization model.

Benefits:

  • On-time delivery went from < 65% to 82%
  • Invoice accuracy improved from < 80% to 94%
  • Restored pricing and increased market share
  • Increased sales 6% above planned output in one regional market with constrained supply
  • Reduced inventory levels from 29 days to 21 days within one year of go live
  • Reduced manufacturing costs by over $12M/year
  • Reduced freight costs by over $7M/year
  • Reduced supply chain planning finance costs by over $2M/year'

Defining supply chain processes to support a direct marketing firm’s global operation strategy

Client Issue:

A global direct marketing firm was undergoing an operational transformation to expand their manufacturing from a centralized, domestic model to a more responsive and cost efficient global manufacturing and delivery model. After experiencing core issues through the early stages of the transition, the company approached PwC to help improve their understanding of their current supply chain process in order to successfully execute their transitions. PwC's operations and supply chain professionals worked with the client to document their existing supply chain processes. With an understanding of the current supply chain, PwC helped identify process gaps, major roadblocks and key decisions. PwC then assisted in the development of future state models, by providing an assessment of industry leading supply chain practices, and assisted with the identification of opportunities for improvement.

Benefits:

  • The client was able to successfully plan, execute and improve their future-state supply chain transitions
  • The resulting supply chain structure helped minimize risk and exceptions that disrupt and delay in delivery to their end clients

Data Analytics

Procurement Analytics at Building Materials Client

Client Issue:

The client, a leading manufacturer of building materials, had multiple plants located across different geographies, with each having a non-standardized independent procurement process. The client wanted to streamline the procurement process and identify opportunities to save cost. Furthermore, the client had limited visibility on leakages due to vendor management, purchase order inconsistencies, and invoice payables discrepancies. PwC’s data analytics professionals helped identify profitability enhancement opportunities through optimized pricing, a better invoicing process and improved contract negotiations.

Benefits:

  • Aggregated and standardized over two years worth of information to help client generate business insights and identify issues with pricing, invoice payments, and price negotiations
  • Highlighted several sub-optimal vendor contracts, high variance in procurement prices of similar commodities, and contract inefficiencies across plants
  • Recommendations helped the client realize cumulative benefits of over $20 million in savings

Demand Driven Replenishment at Food and Beverage Client

Client Issue:

The client faced the issue of out of stock and growing backroom inventory at the retailer, resulting in lost opportunity and higher inventory holding cost. The average out of stock was 13% which is significantly higher than the industry average of 8%. Backroom inventory at stores was also higher than industry average (24% of volume). PwC’s data analytics professionals designed and deployed a custom demand driven replenishment system, to reduce the out of stock problem at the retail level.

Benefits:

  • A custom demand driven replenishment system which used time series models to predict weekly demand at a store-SKU level
  • Successful nationwide rollout of the solution across the company’s distribution network
  • The solution yielded 8% reduction in out of stocks, 10% reduction in backroom inventory, and 15% reduction in headcount driving a projected $20 million annual EBITDA contribution

Information Technology Transformation

Transition from reactive to proactive security environment

Client Issue:

After repeated lapses in security, an international company asked PwC to assess the maturity of its security organization and systems. A technical assessment was needed of overall security posture and current and potential risk areas, including guidance on how to limit and prioritize those risks. Using PwC's proprietary framework, the PwC team developed a work plan that utilized our global reach and technical skills. Security and controls data was collected at 25 locations and interviews were conducted with more than 150 stakeholders and handlers of sensitive data. PwC performed technical assessments to verify that security procedures were operating effectively, including attack and penetration, breach indicator, sensitive data assessments, and platform security reviews. Post-assessment intensive planning workshops were held to determine and prioritize remediation efforts. Finally, PwC developed an efficient implementation road map and target future state with a prioritized evolution model for the company's security organization.

Benefits:

  • Enhanced independent view of security organization for senior managers and a road map to develop a long-term plan to enhance security
  • Awareness of the specific resources needed to bring security organization up to par with industry peers and personal risk tolerance
  • Transformation from a reactive to a proactive security environment

IT strategy roadmap development and execution

Client Issue:

A large Retailer and Direct Marketer maintained a complex, legacy portfolio of over 400 commercial and custom systems that were lagging the business demands and consumed 80% of the annual IT budget to simply maintain the current state. Leadership wanted to develop a roadmap, and associated business case, to completely transform its current IT environment to a next generation of systems and platforms that would support the future business strategy. The Company was looking for a capable partner to work collaboratively with the existing team to bring market intelligence, leading practices, and a methodology for driving transformational change. Through a rapid analysis and focused discussions with key business leaders, PwC helped management develop a five year roadmap plan to completely transform its IT environment and align to leaders in the industry. A Program Management office was established with an effective balance of governance to efficiently structure the planning and execution of each of the major initiatives.

Benefits:

  • IT roadmap including a time sequenced plan of initiatives, one-time cost investment, and potential benefits (IT and business) to justify the transformation program, including a structure Project Management office to execute the implementation.
  • Structured and disciplined process for rapidly evaluating and selecting key software and service providers to serve as future technology platforms to support the business in the future

Finance Effectiveness

Hyperion Enterprise Performance Management

Client Issue:

The client ‘s existing process in preparing the consolidated GAAP cash flow statement was manually intensive and time consuming, prepared on a quarterly and annual basis. The forecasting method also lacked precision. The client engaged PwC to help streamline and automate the Cash Flow process and align all reporting with GAAP.

Benefits:

  • A standardized and automated Cash Flow process, enabling the company to achieve efficiencies and accelerate the close and reporting process.
  • Enhanced operational insight into the Cash Flow, due to reduction in time spent on assembling the Cash Flow Statement and increase in time on analysis.
  • Automation through Hyperion Enterprise, yielding a more comprehensive and accurate cash flow statement by eliminating significant manual intervention.

SmartClose

Client Issue:

In preparation for an IPO, the client undertook a Close Process Improvement initiative to accelerate its quarterly close process and to develop a robust reporting process to support future public reporting requirements. PwC was engaged to provide examples of generic close process analysis tools from our past projects for management to consider as they develop their own tools; assess the current state close process; and provide process improvement recommendations based on PwC's knowledge of leading practices and similar engagement experiences.

Benefits:

  • More streamlined and accelerated close to report process to allow for compliance with public reporting
  • requirements and earning release dates
  • Reduced effort to gather, validate and correct data
  • More timely, accurate and relevant reporting; from which to make more informed business decisions
  • More time for value-added analysis and planning
  • Even workload throughout the month

Forensics

Minimizing Loss through Forensic Investigation

Client Issue:

A multi-national privately held firm identified questionable activity that impacted funds held on behalf of their clients. The company conducted a preliminary assessment and found that certain former employees had misappropriated funds from client accounts for their personal benefit and use. PwC worked closely with outside counsel and management to analyze the questionable transactions and related activities of the former employees.

Benefits:

  • Based on the investigation and analyses completed by PwC, the company was able to take proactive steps to reimburse several of their clients for the losses sustained and avoid any further damage to their client relationships
  • The findings and related ongoing dialogue with the company with respect to the identified areas of risk enabled them to enhance processes and procedures and strengthen controls and oversight to avoid similar issues in the future
  • PwC provided assistance to the company as it interacted with its external auditors in connection with its controls and financial statements and its insurance provider as it prepared a fidelity claim in support of loss recovery

Arbitration Assistance

Client Issue:

A multi-national media company was involved in a dispute related to the calculation of a final earn-out payment due to the former owners (and current company employees) of a business that they acquired several years earlier. The company attempted to negotiate the points in dispute with the former owners but was not able to come to a resolution, and, pursuant to the purchase agreement, submitted the matter to an independent arbitrator. PwC worked with the company to develop an understanding of the purchase agreement, the calculation of the earnout payments and the related items under dispute.

Benefits:

  • PwC identified the key areas of focus for the submission to the arbitrator and conducted targeted research to support their argument with relevant GAAP citations
  • PwC was able to guide the company through the arbitration process and submit a report that was supported by appropriate documentation and other evidence
  • The arbitrator ruled in favor of our client on one of the two issues in dispute, which resulted in a reduced earn-out payment to the former owners
  • PwC also identified information during the discovery process that helped our client negotiate a more favorable separation agreement with one of the former owners