In earlier articles, I discussed issues confronting early stage and middle market companies. This was in relation to Markets and Model, two of the Four Ms in Newport Board Group’s framework to help companies navigate through No Man’s Land.
In a previous article, I described an example of changes in healthcare delivery that can help get America past the stale debate over Obamacare toward innovation to improve healthcare while reducing its cost. What is being called “telemedicine” or “telehealth” is a potentially radical shift in how healthcare is delivered. It combines remote monitoring of patient health, remote access to doctors to overcome the barrier of distance and portable medical records and profiles.
The debate over the future of healthcare in America often seems locked in a tired zero sum game. Either you are in favor of Obamacare or against it. Either we improve the quality of care or reduce its cost. My colleagues in the Healthcare practice of Newport Board Group think otherwise. We advise healthcare innovators and the private equity firms that invest in healthcare businesses. We believe that technology and new business models can transform how healthcare is thought of and delivered, improving quality and reducing cost.
Getting to scale is the most important challenge that emerging growth companies face on their path to realizing their potential and generating real wealth for their investors and at least some of their executives and employees.
While there may be few issues that both political parties in the United States can agree on, over the last two decades nearly every politician and pundit has stressed the importance of returning U.S. jobs.
Part One of this article discussed how emerging and mid-market companies often need to raise growth capital, attract an M&A or private equity deal, or boost profitability and capital readiness for other reasons. Most management teams know their ability to generate cash flow will be scrutinized as an indicator of potential to generate future returns by investors, acquirers and banks alike.
Dwight Eisenhower once said, "In preparing for battle, I have always found that plans are useless, but planning is indispensable." This quote is one of the best aphorisms a business owner can have.
Reed Kingston of InsightSPI, a performance software company, recently posted a blog article on an important new development for middle market companies: tools for analytics. He says that Business Intelligence (BI), and even “big data” are becoming available for firms with limited IT budgets.
Middle market private equity firms take different approaches to building financial management capability at their portfolio companies. After closing the deal for investment in a company, they often choose to keep the financial manager in place, whether he or she is titled CFO, controller or something else.
When emerging mid-market companies need to raise growth capital, attract an M&A or private equity deal; their current cash flow will be closely scrutinized as an indicator of their potential to generate future returns. At this critical point in their evolution, many companies scramble to make improvements to their gross margin percentage. They see even small improvements in gross margin as a step toward impressing investors or acquirers as to their potential to build leverage and generate future profits.
© 2014 Newport Board Group, LLC