Due to increased competition and rising costs, private equity firms are prioritizing value creation more than ever. These firms aim to create value through strategic investments, striving for measurable growth in their portfolio’s value. Each private equity deal is unique and tailored to the specific market and industry of the investment. Firm partners face the challenge of generating substantial returns on their current portfolio while identifying future demands and transactions.
NetSuite for private equity firms provides tailored business tools specifically designed for the industry. The NetSuite Private Equity Practice can help companies streamline operations across the portfolio on a single platform. As a fully cloud-based solution, you can customize NetSuite to scale with your operations. In addition, it can replace the need for IT hardware, allowing you to redirect IT resources to other tasks.
Our industry and technology consulting teams are observing an increased use of technology across the PE sector. As a certified NetSuite partner, professionals at Forvis Mazars understand the setup NetSuite requires for private equity firms. When private equity companies and their portfolio companies adopt NetSuite, both may benefit from increased profit margins, reduced waste, and a clear path to future transactions. Technology consultants at Forvis Mazars can help companies implement NetSuite and customize the platform with automation in mind, helping to unlock greater efficiency.
NetSuite Private Equity Value Drivers
NetSuite has been a key enterprise resource planning (ERP) provider in the private equity and venture capital market since 1998. Over the past decade, NetSuite customers alone account for 63% of tech company initial public offerings.1 Private equity firms and backed companies consistently choose NetSuite for their ERP system for a multitude of reasons. NetSuite offers easier exits and helps to reduce risk, enhance scalability, accelerate financial reporting, and standardize processes.
NetSuite tools can help private equity companies meet their distinct growth and investment strategies. These strategies often involve acquisitions, carve outs, and divestitures and typically operate under tight timelines and budgets.
| NetSuite Tools for Private Equity Companies | |
|---|---|
| Carve Outs | NetSuite features a methodological carve out model with dedicated resources focusing on deploying ERP services quickly, helping to reduce risk and costs. |
| M&A | ERP & customer relationship management (CRM) assessment and advisory. |
| Operational Effectiveness | Detailed assessment of current ERP & CRM systems to help improve savings and workflows. |
| Fast, Efficient Implementation | An agile, scalable approach to ERP deployment with developed best practices. |
| Relationship Management | Experienced professionals to contact for system needs. |
| Hyper-Growth Technology | Rapidly growing portfolios can migrate to multi-tenant, cloud-based ERP software to be better equipped for additional subsidiaries. |
| Financial Impact | Preferred terms for private equity firms that lead to fewer incurred costs than on-premises IT infrastructures. |
| Global Delivery | Consistent service and delivery across North America, Europe, and Asia. |
| Business Intelligence | Real-time actionable insights and next steps for operations, resources, and personnel. |
Use Cases
Private equity companies face unique operational and reporting challenges. The case study examples and use cases below highlight how NetSuite ERP tools can help companies streamline operations, reduce risk, and drive growth.
Acquisition Scalability
For growing businesses, acquisitions can complement their business strategy. NetSuite is designed to handle acquisitions with rapid integration and the adoption of new business models.
In this case study example, a large private equity-owned medical device manufacturing company acquired another company in the same industry. This was the first acquisition for both companies, which had more than 10,000 employees after the consolidation. Shortly after the acquisition, the company went public.
The project required significant coordination among various functional teams and value drivers. Functional workstream coaching was provided to help the teams with no prior acquisition experience. From this, they were able to manage and execute the integration plans effectively.
Creating a large original equipment manufacturer and supplier in the healthcare sector required more resources and greater experience in change management. The integration planning and execution included process, people, and technology aspects.
More than 100 leaders participated in a client-led joint planning kick-off meeting. A repeatable integration methodology was developed for use with future deals. A change management framework was implemented for future corporate initiatives. As a result of the acquisition and integration efforts, the company’s stock price increased by 40% within two years of going public.
This example highlights the value added through effective integration and management during acquisitions and how NetSuite can help support these efforts by providing the tools and methodologies for agile integration and scalability.
Carve Outs
A multi-subsidiary company looking to divest one or more of its branches can consider a carve out. NetSuite’s Multi-Subsidiary Customer feature can help these organizations integrate and run on the platform quickly.
This case study example involves a pool equipment manufacturing company that integrated a carved out entity to complement its footprint. The company also anticipated more acquisitions in the future. To build internal capability and reduce dependency on external help, the client aimed to create a repeatable process for managing integrations.
To support the integration of the carved out entity, our professionals assisted the company throughout the full acquisition life cycle, from due diligence to post-close integration. We helped the company establish a client-led acquisition management office to drive finance, human resources, engineering, operations, legal, and information technology workstreams.
The workstreams developed integration charters, which facilitated the creation of the overall project plan and management of project deliverables. In addition, professionals at Forvis Mazars assisted the client in developing the initial pro forma statement and updating it throughout the integration to track the deal’s financial performance.
Our professionals also compiled an acquisition playbook for the client to use in subsequent deals, containing the steps, accelerator tools, and methodologies needed to manage future integrations.
The carve out integration was fully absorbed within six months, encompassing ERP, human resources, manufacturing, and financial reporting. The client reported this project to be one of the smoothest-run acquisitions, significantly improving communication and management accountability to executive management.
This case study highlights the importance of having a structured approach to acquisitions and the potential benefits of using NetSuite for private equity carve outs. NetSuite’s ERP tools enabled the client to streamline back-office functions, achieve swift time-to-value, and build a repeatable methodology for future deals.
Buy & Build Flexibility
In this case study example, a private equity-owned firm in the transportation and logistics industry, with no prior acquisition integration experience, utilized NetSuite’s ERP tools to streamline operations and achieve swift integration. The company quickly brought new acquisitions onto the platform, enhancing overall efficiency and performance.
Professionals at Forvis Mazars assisted the client with establishing an interim integration management office, conducting post-deal discovery, and advancing integration planning. In addition, the client-led integration management office managed weekly meetings and documented progress plans for steering committee review. The client-led integration management office and our professionals collaborated to develop a repeatable methodology, including tools and templates, for future deals.
The results included the establishment of best practice methodology, tools, and templates for future deals and integrations.
Advanced Reporting & Risk Management
NetSuite ERP can equip private equity companies with powerful reporting and analytics tools, delivering critical insights into various business areas. With its customizable dashboards and real-time analytics, companies can track key performance indicators, drill into financial data, and identify potential growth opportunities. Here are some pivotal features.
Subscription Management
- Dynamic Pricing: Pricing evolves as businesses grow and market conditions shift.
- Financial Tools: NetSuite’s financial management tools, including SuiteBilling, can assist with managing subscription changes, automatically renewing subscriptions (with applicable price adjustments), and maintaining compliance with the ASC 606 Revenue Recognition standard.
- Revenue Recognition: Follows the ASC 606 Revenue Recognition standard for accurate financial reporting.
- SaaS Popularity: SuiteBilling is widely used by SaaS (software as a service) companies for its robust subscription and pricing management features.
Inventory Management
- Risk Controls: NetSuite can help enhance control and risk management through automated workflows and approvals, improving business processes and workflows.
- Tracking: NetSuite tools provide serial numbers and lot tracking, which are crucial for manufacturing companies.
- Financial Integration: Inventory management data integrates with financial reports, providing actionable insights and audit trails.
- Pre-Configured Reports: NetSuite provides pre-configured inventory valuation reports for accurate tracking and detailed audit trails.
Income Statement Reporting
- Consolidated Reporting: NetSuite can provide consolidated income statements with drill-down capabilities, enabling filtering by organization and department.
- Excel Integration: This facilitates the transition from Excel by integrating spreadsheet data into inclusive NetSuite reports.
These features collectively enhance NetSuite’s financial reporting and risk management capabilities, making it a valuable tool for private equity, finance, and operations professionals.
How Forvis Mazars Can Help
Learn more about this topic in our on-demand webinar, “Unlocking Portfolio Value With NetSuite.” Forvis Mazars’ professionals can help you vet your technology, upgrade systems, and deploy effective strategies to help you reach your business goals. The wealth of knowledge and experience we bring to the table can help you unlock greater operational efficiency. Connect with us today to discuss NetSuite for private equity firms.
- 1“Why ERP is Instrumental in Public Offering Processes, Including SPACs,” netsuite.com, July 1, 2021.