10 May Improving Margins and the Exit Multiple with Smart Tech In PE
Margin and multiple value levers
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.
Mentioned in this Episode and Other Useful Links
- Article 1: Margin Improvement with Predictive Maintenance
- Article 2: Deploying Data-Driven Business Models for Multiple Expansion
- LinkedIn newsletter containing these and future articles
- Season 1: Related episodes
- Season 2: Episodes and show notes
- Season 2 book: The Private Equity Digital Operating Partner
- Season 1 book: IoT Inc
- Training: Smart digital transformation certification
