Challenge

When a private equity sponsor was evaluating whether to exit one of the world’s largest travel portfolio companies, it needed a strategic way to enhance KPI visibility and reporting capabilities to tell the investment story.

The travel company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) was below the sponsor’s exit target, and an understaffed finance team had difficulties producing key data and reporting. These issues were compounded by a lack of modern technology and skilled resources.

How We Helped

CrossCountry deployed a team of cross-functional data and finance transformation experts on a series of workstreams to:

  1. Conduct an overall sales, general, and administrative (SG&A) analysis.
  2. Conduct a sales optimization analysis.
  3. Redefine incentive compensation plans in a way that promoted cross-selling across product lines.
  4. Identify KPIs to support actual and forecast financials.
  5. Create a data warehouse for ongoing tracking and monitoring of identified KPIs.
  6. Educate management on the factors impacting valuation and buyer perspectives on the business.
  7. Establish a framework for management to reassess valuation drivers and reprioritize strategic initiatives.

With a renewed focus on reducing margin erosion, the company was positioned to accelerate market readiness and exit valuation in the months ahead.

Results

Throughout the engagement, the team collaborated closely with the company stakeholders to provide benchmarking against industry standards, identify opportunities for cost savings and technology improvements, and build a proposed implementation plan.

Through these efforts, the team was able to deliver a menu of 20+ margin improvement recommendations to achieve:

  • $18.5 million annual cost savings.
  • Annual EBITDA to bridge to EBITDA target.
  • 3% EBITDA margin improvement.
  • New HR operating model.
  • Future-state commissions plan.
  • Enhanced Last 12 Months (LTM) performance ahead of sale.

With a future-state roadmap of process and technology optimizations, management was better able to illustrate business performance, support the equity story, and defend the forecast. This enabled management to shift from a revenue-driven to a margin-driven mindset to help maximize value at exit.