PMCC Interactive

Tag: Business Strategy and Business plans

  • Back at it — and energized for what’s next.

    In July 2024, I stepped in to help lead a turnaround effort at Urban Engineers, Inc. After a focused and productive year, that chapter is moving into a new phase.  I Congratulate the two new leaders named today- Jim Bilella as CEO and Chris Bobrowski, CFO.  I worked very closely with each and know that each will do the job necessary for Urban to reach it’s objectives.  I will be remaining on the Board of Directors.   AND I’m excited to return full time to PMCC Ventures.

    For those who’ve followed the journey, this latest assignment brought things full circle. Urban’s HQ is across the street from where my consulting career began in 1984. The lessons I learned in my 20s — from auditing an ENR Top 5 firm — still proved useful in my 60s. Some fundamentals really do hold up.

    What’s next?

    • PMCC Ventures is once again open to new engagements
    • We remain focused on strategy, business readiness, leadership transitions, and unlocking value through better insight and execution
    • We’re continuing to help owners prepare for and execute successful exits

      The M&A market is active — but more crowded and complex than ever. Standing out requires more than just a good story.
      • Performance matters
      • Sound insight and foresight is rewarded
      • A clear sense of what is possible and achievable is essential

    We’re here to help business owners position themselves credibly and confidently.

    But M&A is only part of the work. At our core, we still believe:
    Good information + grounded leadership = real change.

    More to come soon.

    If you’re wrestling with complexity — or just want to sharpen your thinking — let’s talk.

  • Balancing Value Creation and Cost-Cutting: A Strategic Imperative for Today’s C-Suite

    Or, don’t just lunge at cost cutting- adopt approach that helps to focus on value creation and cost alignment

    In the current business climate, the challenges are twofold: sustaining profitability and maintain the capacity for value creation. There’s a heightened focus on cost-cutting as the immediate remedy for financial ailments. However, knee-jerk reactions can be detrimental in the long term. This post aims to shed light on the equilibrium between cost management and value creation that C-suite executives must strive for, especially in middle-market companies with revenues between $50 million and $5 billion.

    The Temptation to Just Cut Costs

    We are in a phase of the business cycle where cost-cutting seems to be the elixir to all problems. The media spotlight on downsizing and operational cutbacks can tempt leaders to make hurried decisions, focusing merely on reducing expenses. This approach may show quick wins, but the medium and long-term implications often offset these immediate benefits.

    Lessons from the Past

    The history of Leveraged Buy-Outs (LBOs) in the mid-1980s offers valuable insights. The dominating narrative was to “cut costs,” and it seemed like the logical step to generate sufficient cash flow to service debt. However, many businesses realized that this approach was not sustainable ad many cost cutting only exercises diminished the ability to quickly pivot as competitive positions changed  and the goal was not just to survive, but be prepared for value creating exits that rewarded owners and investors for the risk they undertook.  As it turns out, the goal is common, but indeed the approach does depend on your starting point, and capacity and capability to undergo change.

    Assess, Plan, and Act

    Before embarking on a cost-cutting mission, it is crucial to take a step back and assess the situation you are encountering- “why you are here” the competitive environment and ultimately what you are trying to achieve.  Here are some thoughts that might help sharpen your team’s thinking about the challenge and the opportunity.

    1. Alignment with Core Strategy: Make sure that changes you make and the resulting  cost-structure, supports achievement of your value creation goals, as well as your short term actions necessary to “weather the storm”. 
    2. Future-Readiness: Cost-cutting should not come at the expense of innovation and future growth that is in line with your goals and mid and long term value creation.  At the same time, this concept should not paralyze the efforts to get ahead of the real challenges you face.
    3. Employee Morale: Dramatic cutbacks can have a cascading effect on employee morale and productivity, affecting your most critical resource.  And at the same time, our experience is that many employees question what took leadership so long to come to grips with these critical matters.

    Balancing the Scale: Value Creation and Cost Cutting

    To achieve sustainable growth, businesses need to find a harmonious balance between cutting costs and adding value:

    • Invest in Talent: Reducing headcount may bring immediate cost savings, but investing in the right talent will yield productivity and cost gains along-with mid and long term value creation.
    • Technology as an Enabler: Instead of slashing technology budgets, consider how automation and digital transformation can lead to both cost reduction and value addition.  Also consider how technology can be used to both improve outcomes and help key employees do their jobs better and feel like they really contribute to the success of the business.
    • Customer-Centric Approach: Instead of compromising on customer service, explore ways to enrich customer experience. This is a powerful energy source for these efforts and the business
    • Data-Driven Decision Making: Utilize data analytics to identify inefficient processes and operational bottlenecks. This approach enables informed decisions, rather than across-the-board cuts.

    Conclusion

    Cost-cutting is not inherently detrimental; it becomes so when it overshadows the more vital goal of creating value. As a C-suite executive, your role isn’t just to survive the downturn but to position your company for future opportunities. By maintaining a balanced approach between cost management and value creation, you are laying the groundwork for sustainable growth and long-term success.

    For a deeper discussion and more targeted strategies on balancing these aspects, just click here

    https://pmccinteractive.com/wp-content/uploads/2023/09/20230918-value-creation.pdf

    Or reach out directly: pjm@pmccventures.com or  calendly.com/pmccventures-pjm-4

  • Pat McCormick joins Urban Engineers Board of Directors

    I am honored to have the opportunity to serve the people and owners of Urban Engineers. Urban is an ESOP company so there is a lot of enthusiasm and team work evident in the business.

    I was impressed in our first Board event to hear the management team express how they treasure long term client relationships and the passion they have for dealing with complex situations in sound and innovative ways.

    To read more about Urban Engineers: https://urbanengineers.com/news/urban-appoints-patrick-mccormick-board-of-directors

  • The conversation about the role of the CFO- and where she adds the most value continues- but the bottom line is that Finance counts!

    Thirty some years ago, we began research on the role of the CFO and the impact of financial leadership on the performance of the enterprise.  After interviewing and reviewing more than 50 organizations and engaging thousands of CFO/Financial leaders in workshops around the world, we found that there were several determinants of success.

    Moreover, we found great frustration on the part of CFO’s wanting a seat at the “business management/Strategy table” and the rest of leadership questioning why they needed/should have that seat.  While that conversation continues, the accompanying link to the Visual Capitalist shows that significant progress has been made and that the conversation continues and that is a good thing.

    Enjoy the link:  https://www.visualcapitalist.com/future-of-the-cfo/

    Meanwhile, each day, we continue to prompt the conversation and help Clients create value by  improving the business of their business

  • PMCC Ventures Transaction Support Services

    PMCC Ventures been in business for over 12 years, having built on the prior 28 years’ experience – and doing what we have always done and love: Helping clients improve the business of their business.

    Clients have changed, industries have changed, the starting point and nature of the assignments have changed, but a few constants remain in our work with clients to help them improve the business of their business:

    • Run the business like they will be selling it tomorrow at the best possible price. Make smart moves that create or sustain value all of the time.
    • Know more about their markets, customers and operations and apply that knowledge each and every day. Have a strong sense of inquisitiveness guided by a passion for just doing it better.
    • Really know how you make money in your business and your industry. Stretch to know more and more each day about the systems and interactions that help you create value and take all steps necessary to support and develop those capabilities.
    • Make sure that decision-making is not only fact based, but that it recognizes systemic outcomes, and connects strategic, operational and economic factors.  Communicate and discuss key understandings about the business with your team so that all understand how to best create value in the business each and every day.

    We apply this thinking in all of our work for our clients.  It helps us focus and prioritize, and requires us to understand the system and interdependencies at play in each circumstance – and to not take anything for granted.

    Applying Our Process to Transactional Support

    As we look at the pattern of our work over the past several years- the one striking realization is that we are now employing this thinking in the more than 70% of our work that involves some sort of transaction.

    • Assisting sellers
      • Transaction Preparedness Assessments- quality of operations, strategy and results
      • Developing and implementing plans to enhance the value of the business
      • Develop and stress test business models
      • Business plan preparation
      • Sales strategies
      • Offering memorandum preparation along with road show support
      • Sales process assistance management
    • Assisting Buyers
      • Diligence
      • Deal structure formulation
      • Integration planning and integration support
      • Post-closing reviews and targeted analytical work
      • Ongoing operations support

    Cross industry and cross functional experiences applied in a strategic, operational and financial context are important to our clients

    We have found that working on both sides of a transaction helps us to better understand what is on the mind of the “other side”. As a result, we can anticipate many issues and challenges before they arise and deal with them “as a matter of course” in the process instead of them becoming hurdles to concluding a transaction.

    Our industry and process experiences obviously help us to do our work, but more importantly, our cross-industry and cross-functional experience helps us to better understand the fit and dynamics of each business and to foresee issues that might arise that could damage a transaction – before or after the sale.  We view these matters in the interrelated context of strategy, operations and economics.

    We work cooperatively and compatibly with all of the professionals to get the job done for our client in the most effective and efficient way possible.

    If you are interested in a good deal that has a great chance at creating value, we are very interested in talking with you.

    pjm@pmccventures.com

  • Changing strategies…. make sure to check the alignment

    We are in a period of uncertainty on many fronts….Technological, shifting go to market options and priorities, emerging and leap frogging competitors and opportunities, just to name a few.  Many are appropriately responding to the changes by revisiting goals and objectives, and their strategies to achieve them.  In these times it is important to remember to adjust business practices, processes and resources to support your chosen strategies to ensure sustainable success.  Read more:  Strategic alignment notes

  • Helping create value in underperforming and underachieving Private Equity Investments

    The Best way to make money is to start by not losing it.  PMCC Ventures has worked with scores of private equity backed companies to improve performance and move from the bottom 50% of performers to the top 50%.  Our 35 years of experience span industries, company size, stages of development and  range of performance.  These individual experiences are good and interesting.  The combination of the experiences provides our clients with significant value.  We understand that underperforming is not a comfortable place for most organizations- and we know how to help stabilize the organization to enable it to execute a thoughtful and productive process to become the best it can be.

    The core investment hypothesis generally revolves around finding several good business ideas and businesses and provide capital to help them become value creating sustainable businesses.  That is the straightest path to value creation.

    Sometimes, companies stagger along that path.  Changes might occur in markets and industries, the company is leapfrogged by competitors, or the company just isn’t executing the way it needs to.  The bottom line is that the company slows progress and its  performance begins to deteriorate yields on investment.

    Most Private equity firms plan for and build to manage the upside.  That makes sense until the arrows start pointing down.  Our approach is to support our clients dealing with downturns, and underperforming and underachieving investments.  We have the skills experiences, and track record to help clients get out of the hole and back on the path to performance and value creation.

    If you want to learn more, click on the link below.

     

    20170217-pe-brief-challenged-situation

    s

  • Best wishes for a prosperous, healthy, happy and meaningful 2017

     

    As we move on to a new year, I wanted to take a time out to thank all of you that have supported PMCC Ventures in 2016.  I appreciate it.  We had an interesting year, and I hope we continued to serve our clients in the exact way they needed support- and to help them create value.

    As we committed at the beginning- now 10 years ago, we are once again sharing our reflections on our key learnings from the past year.  We share them in hopes that you find them interesting, but more importantly helpful in some situation you are yet to encounter.

    Most all of our assignments this past year, revolved around private equity, structured finance or dealing with some sort of performance gap.  It felt good to get back to our roots, as we really enjoy working in this space.  Not sure if it is our familiarity or the dynamics or both…  Each situation was different- and at the same time, they were the same.

    In the world that we work in, it is an oft repeated phrase: “But you don’t understand: We are different”.  So over the past year or so, we concentrated on understanding differences, but of course to do that effectively, we had to also focus on similarities.  We found that there are of course differences—but they are generally rooted in the management team and the backgrounds they brought to the current situation.  In the world of underachieving organizations, there are a lot of similarities- about what the company is experiencing- and how they got into the situations they are encountering.  Our reflections below will share some of those insights.

    We are going to place a lot of focus and intention on underperforming and underachieving organizations in 2017.  We know that there is a lot of opportunity created by organizations as they “bounce off the bottom”.  We want to work with them, to minimize the disruption and maximize the height of the bounce.

     

    Reflections on 2016

    Underperforming and underachieving organizations—similarities and differences-

    Conditions that seem to be common:

    • Markets in flux… Difficult to grasp meaningful movement and change in direction… differing pace and intensity of changes experienced serve to further disorient and generated confidence in a direction to follow
    • Leapfrogging technologies… Shortening product life cycles… Difficulty keeping up with emerging opportunities and disappointments of disappearing opportunities… Uncertainty about where to place bets… Difficult to recover development costs… Staffing and knowledge base challenges…
    • Shifting customer needs, performance and loyalties… Customers face similar challenges… The importance of the relationship to weather these challenges is significant… keeping up with the various stages of relationships and lifecycle events was costly and required a lot of attention and time…Not getting it “right” was a death knell…
    • Critical resources: time, talent, capital and information are in short supply and not optimally applied… The longer the challenge, the more resources evaporated or became stretched… Market and technology changes make it tough to keep fresh and relevant talent available to pounce on opportunities… Capital or loan opportunities are already stretched, making new sources a real challenge to obtain and likely costly… The lack of relevant information- particularly about changing conditions was the most insipient and critically important… Resources frequently diverted to ministerial matters and strategies that were not promising….
    • Shifting contexts are confusing and make it difficult to plan and act- systemically and consistently… Difficulty keeping up with changing situations… Rest of organization characterizes management coping with this poorly, without fully understanding the volume of change, conflicting insights and information that management is juggling….
    • Time and focus shifts to dealing with ministerial duties and away from the things that help an organization create value… Increased time dealing with regulators, lenders, investors, lawyers etc.…. less time and energy available to focus on customers, markets and operations… can become a spiraling situation further driving organization from value added thinking and action
    • Responses become operational… and less strategic…and less cognizant of the system…. less value placed on thinking and more on motion than forward action… concepts of motion and action became confused… More inwardly focused…. People satisfice and focus on surviving and not thriving

    Underperforming and underachieving organizations—Conditions that are different

    • Type of presenting issue…Industry wide… or specific to the organization… influences the dimensions and probability of positive outcomes
    • Management team Experiences… many teams’ experiences and persona are growth oriented… many individuals and rarely teams have the experiences to manage through the downside… Team members selected for deep functional excellence- when the premium capability… is cross-functional systemic thinking and action
    • The starting point… Objectively how deep is deep? … How much effort needs to be extended to get back to “even”
    • Recognition and resolution…How well does the team recognize the challenge at hand?… How prepared are they to come to grips with it… Denial,,, Anger… Acceptance… Resolution and Healing….
    • Time and what has transpired so far…Passage of time and prior decisions and actions can either negatively or positively influence the outcome and the [re] starting point for any transformation activity
    • Capacity and capability… Influence the effort, the timing and the intensity of the change effort that can be applied- and hence the duration of the transformation period
    • The ability to execute the steps needed to … gain control and stabilize- what has been done- what needs to be done… when should it happen… distinguish urgent and critical… What might foreclose opportunities to maneuver later….
    • Resources… Does the organization have the resources (time… capital… talent… information) or can they be secured or created] to accomplish the necessary changes…. If not, what is a practical level of desired achievement in the best possible timeframe…

    Be diligent with diligence

    • Set a plan… Execute the plan…completely…. particularly in new or challenged situations… make sure that the basics of the deal are covered….  Risks are articulated and strategies in place to manage them… Know the structure that the new entities need to work within… head that direction… make sure that the inventory of service level and retention agreements are adequate and that they are favorable to provide the time and focus to accomplish “newco” requirements…Don’t assume… focus on key risks… identify transitional resources… remember, you don’t always get what you thought you would buy

    Strategy is not just adding and doing new things

    • Strategy is about placing resources and bets to win… it is not about adding efforts and requirements without ensuring that key resources are available…. .it is about making choices… overloading (or under-resourcing) an organization is a sure fire way to help a strategy fail…be thoughtful, realistic and practical about what it will take so succeed

    Strategic, financial and operational information is not like wine or cheese… the situation doesn’t get better with age when you don’t have them readily available

    • Integrated and systemic information is key to success… What insights do you need to run the business…is it readily available… against a context or model that makes sense for the business…Do the timeframes represented make sense…. Is it published in times and ways that can help make a difference… are all of the answers to the repeated or likely questions presented… Can you say immediately….” Now I understand” … Or do you have to do some of your own digging or calculations… Late or incomplete information are bad within themselves, but more importantly point to the existence of other organizational challenges…the organization that invests the effort to do this right will improve performance because of better insights…. And will improve processes and data models that will increase quality of controls… administrative effectiveness… efficiency….

    Marketing is a key turnaround tool and weapon

    • Getting the basics of marketing straight has never been more important…If you don’t understand your markets, your customers, their needs and wants- cold… be assured that someone else is trying to figure it out…and might beat you to the punch… Whether you deploy it physically, digitally or better- both… the basics are key…. No one has the time or the luxury of getting it wrong with customers today… few have extra resources to deploy in a wasteful way… though this waste is rarely evident- it represents a lot of cash and a lot of unmet opportunity…There is someone out there right now trying to know and attract your markets and customers… they just hired “that person” who knows x, y, or z technique cold—and they are deploying it for your customers…now

     

  • Turnaround of Community Mental Health Organization

    Client Engagement Summary

    Client Description:

    Public mental health organization

    Client Opportunity or Challenge:

    Client faced a myriad of challenges including but not limited to:

    • Weak financial planning and controls capabilities
    • Paucity of operational and management information
    • Bank wanted to foreclose on debt
    • Cost structure did not match declining revenue structure
    • Funding changes due to change in government regulation
    • Weak Billing practices and collections

    Role:

    Interim CFO and Chief Restructuring Officer

    Outcomes or Benefit:

    • Negotiated and extended debt agreements
    • Improved financial reporting with emphasis on operational reporting to discern profitable and non-profitable programs
    • Devised and executed strategies to either align program revenue and costs or to exit certain programs
    • Devised monthly performance management and accountability process to ensure that strategies were effective, being enacted and yielding intended results
    • Renegotiated leases for terminated programs without suit or extraordinary cash requirements for client
    • Agency has sold businesses, cash flow is improving and agency is poised for growth

     

    NOTE:

    Client names are not used because of Client privacy and Confidentiality Agreements.  Similarly, facts are cloaked to preclude people from deducing the Client name or situation.

  • PMCC Services Overview

    Built on more than 30 years of experience, we tailor services to meet our client’s needs. For an overview of our capabilities and point of view, read: 20110425PMCCI Services v2

  • Challenges remain for many companies because of the slow pace of recovery

    PMCC Ventures and Pat McCormick have significant experience in helping challenged companies deal with their realities and options.  Our services cover most all requirements of of a business struggling to perform in tough economic conditions.  We focus on Operational Improvements, Working Capital Management, Organizational Effectiveness, Business Strategy and Business plans, Lender and Investor Relationship Management including negotiation of key agreements related to challenged companies.  For more insight, continue reading…

    20110323 Pat McCormick challenged Co Background