Find the margin the pack doesn't show you.
Which business units, customers and products actually create the profit in a portfolio company, and which quietly destroy it? We build defensible cost-to-serve models for diligence and value creation, so you see the real profit map in weeks, defend it in front of a committee, and hand the asset a model it owns for the rest of the hold.
Test the quality of the earnings
Before you sign, see whether the margin is broad or propped up by a handful of accounts. We map customer and product profitability on a true cost-to-serve basis, flag concentration and loss-makers, and pressure-test the pricing. It is the question the data room rarely answers honestly.
Turn the map into recovered margin
After close, the same model becomes an operating tool: re-price the loss-making tail, set minimums that work, fix channel economics, and track the gain month by month. Because the finance team owns it, the improvement compounds through the hold rather than fading after the report.
PORTFOLIO PROFIT, RANKED BEST TO WORST
Illustrative. The whale curve is the first thing an investment committee understands: a profitable core, and a long tail giving margin back. The gap between the peak and the final line is the value-creation opportunity.
EBITDA tells you the business made money. It does not tell you which half of the business made it.
That is the gap we close. A standard P&L and a multiple cannot show which customers and products carry the margin and which erode it, because the cost of serving them sits in overhead, averaged away. A cost-to-serve model opens it up: defensible, fast, and built so the asset keeps using it long after diligence.
Common questions
- How fast can you build a cost-to-serve model for diligence?
- A diligence-grade view runs in two to four weeks, working from the target's existing exports. It is fast because the model does not depend on a system integration: we use the order, cost and activity data the business already produces. You get a defensible profit map of customers, products and channels before the deal closes.
- Is the analysis defensible in front of an investment committee?
- Yes. The method is Time-Driven Activity-Based Costing, formalised by Kaplan and Anderson in Harvard Business Review in 2004. Every number traces back to an activity, a time and a rate, so it stands up to challenge from management, lenders and the committee. There is no black box.
- Do we keep the model after the engagement?
- You own it. We build alongside the portfolio company's finance team and hand over a model they can update from monthly data. That turns a one-off diligence exercise into a value-creation tool the asset keeps using through the hold period.
- What kind of value does this surface post-acquisition?
- Typically margin that was hiding below the gross-margin line: loss-making customers and SKUs, mispriced small orders, and channels that cost more to serve than they return. In one distribution business the model surfaced around 2.4 million euros a year of recoverable margin in the first pass.
Diligence on the table, or an asset to improve?
Book a portfolio diligence call. Free, NDA on request, straight to a partner.
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