Revenue analytics accelerates mergers and acquisitions – from exit planning to post-transaction integration – for buyers and sellers.
Large accounting firms like McKenzie and PWC routinely leverage revenue data in their due diligence reporting to provide meaningful information for both buyers and sellers. Unfortunately, small- and middle-market due diligence teams struggle to prepare the same level of analysis due to a lack of internal resources. Time spent wrangling spreadsheets, searching for missing information, and cleaning dirty data can stall mergers and acquisitions.
For buyers, teams need help getting enough quality data from target acquisitions to make strategic pass-versus-proceed decisions before investing. For sellers, teams face elongated exits due to a lack of critical information that buyers want.
If small- and middle-market teams had the same resources as large accounting firms, they could use their data to accelerate the due diligence process.
Avoiding Risky Investments with Revenue Reporting
Consider ABC Strategic, a buyer evaluating a potential $40 million acquisition of an industrial distribution company. The seller’s pitch deck attracted ABC Strategic, so they launched their due diligence process to answer questions about the company’s revenue. For example, which products were selling the most, and what was the revenue contribution of those sales?
Before they could get the answers they needed, ABC Strategic had to bring order to various messy spreadsheets containing the company’s last three years of sales data. They also had to spend significant time cleaning and consolidating the information to analyze the data.
Alternatively, infoFluency activates a data transformation tool to organize information in pre-built analytics dashboards and reports that visually answer buyers’ biggest questions about potential acquisitions. Our Revenue Analytics Report provides an easy-to-understand analysis of revenue trends by customer, product, region, season, and more.
For example, in this report, we can see:
- Regional and seasonal dispersion of sales
- The average lifetime value of a customer
- The average revenue of an average order
- The breadth of the customer base by industry
- Top customers, products, services, etc.
- Total revenue over various periods of time
Sliced and diced, revenue data is some of the most powerful information about a target acquisition.
In the case of ABC Strategic, infoFluency discovered the target company had a concentration problem – very few customers in very few industries placed the majority of orders, resulting in the majority of sales. Losing one of those limited customers could significantly impact the company’s revenue.
Because of the risk the data highlighted, ABC Strategic decided to pass on this acquisition – avoiding a potentially harmful investment.
Seeing Better Valuation with Revenue Reporting
Now, consider XYZ Inc., a company in growth mode with a founder ready to exit. XYZ Inc. hired an exit advisor to find a buyer, and the exit advisor hired infoFluency to help tell the company’s compelling growth story with data.
infoFluency transformed the last five years of XYZ Inc.’s revenue data with an easy-to-analyze visual dashboard, highlighting its large, diverse customer base, robust product offerings, and stable topline growth. Additionally, we prepared a Customer Frequency-Receny Report to showcase which customers loyally returned year after year and which customers needed more touchpoints from marketing and sales teams to increase their loyalty score.
XYZ Inc.’s proactive approach to preparing its revenue analytics data – highlighting its strengths and identifying processes to improve upon its weaknesses – allowed for a smooth exit with a private equity firm impressed with the company’s foundation of analytics.
Accelerate Your Due Diligence with infoFluency
Many due diligence teams see this level of revenue reporting as out of reach, which is why infoFluency specifically offers its affordable, easy-to-understand Revenue Analytics Report to small- and middle-market teams. Our passion is to make data accessible and understandable so that it is a driving factor for business leaders making strategic decisions.
We gather data from disparate spreadsheets and software applications, clean and consolidate that data, and then prepare it for analysis using our data transformation and visualization processes designed to tell your company’s story with data.
Does your due diligence team need more resources and support to provide the necessary data you need to make decisions? We can help. Schedule a call to discuss how we can help during your next merger or acquisition.
