Improving Margins and the Exit Multiple with Smart Tech In PE

The Private Equity Digital Transformation Show

10-05-2023 • 15 min

Solo episode with Bruce Sinclair, the host of the show, discussing how smart digital can enable predictive maintenance for margin improvement and data-driven business models to increase the exit multiple.

In businesses where maintenance has a meaningful impact on margins, we can use artificial intelligence to predict when assets will fail in advance of any noticeable signs of a problem.  By using smart digital to prevent unplanned downtimes, we increase the company’s operational efficiency to improves its margins, for a relatively low investment in tech.

Collecting proprietary monetization data enables the development of novel business models that until recently, were impossible to deploy.  Moving from one-and-done product sales to sales that recur to continuously generating revenue are rewarded by the next buyer paying a higher EBITDA multiple.

In this episode, Bruce discusses:

  • How margins are improved indirectly and directly.
  • Using smart-tech-driven operational efficiency to improve margins.
  • How to deploy predictive maintenance to minimize unplanned down times.
  • The three different ways smart digital can increase the EBITDA multiple.
  • The concept of data-driven business models and how they are created.
  • The example of the power-by-the-hour business model developed by jet engine maker Bristol Siddeley and deployed by GE and others.

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