Improving Efficiency & Building a Long-Term Operating Forecast Model
The Situation
A global sponsor merged two portfolio financial services companies but was having difficulty realizing expected synergies after the first year. A strategic CFO was hired to help navigate the integration of the two businesses and unlock the synergy potential. The CFO engaged Accordion to understand the various functional areas and cost structure of the newly combined business, determine what synergies had been achieved to date, and identify any incremental operational efficiencies. As part of this process, we were tasked to verify the KPIs that drove each functional area of the Company and develop a long-term operational/headcount forecast model driven off the identified KPIs for improved strategic planning.
Services
Value Creation Measurement
Budgeting & Forecasting Process Improvement
FP&A Process Redesign and Implementation
The Execution
- Created a synergy update presentation for the Sponsor to clarify the Company’s current integration progress and communicate synergies achieved to date and near-term expectations.
- Performed several interviews with each functional area leader of the Company in order to:
- Understand and document the core activities each function performed to support the business and recognize any overlapping activities with other functions.
- Grasp what drives costs and headcount requirements for each function and identify any bottlenecks to each function and goals for improvement.
- Examine how each function would scale with the business under various scenarios.
- Produced a detailed overview presentation of the Company recapping our findings from the functional area interviews:
- Executed spans and layers analysis to illuminate the organizational structure and determine any need for centralization and/or distribution of resources to improve efficiency.
- Made an activities overlap grid that organized the 20+ areas of overlap and ranked by priority and potential impact.
- Created a bottoms-up dynamic operational forecasting model, tailored based on our interviews with key stakeholders:
- Ensured that the 10-year, quarterly model has the ability to forecast each functional area by headcount.
- Created a dynamic model that enables the Company to better understand the optimal cost structure at various revenue growth scenarios from costs driven off identified KPIs based on our interviews.
The Results
Accordion’s findings helped the CFO gain more insight into the newly combined business and enabled him to prioritize actions in order to improve operations. The forecast model we provided is now used as the finance team’s key tool for long-term budgeting and strategic planning, particularly for internal/board strategy sessions and sponsor updates.