IT value creation for private equity: lower run cost and prepare for exit
Address the estate costs that weigh on the hold-period plan, and build a technology position that can withstand buyer scrutiny.
Heremba owns the agreed technology value-creation and remediation workstream. We establish the cost and estate position, assess the changes required and carry the programme into delivery. The work connects operational requirements to the cost of change and the evidence needed for exit.
Estate remediation, evidenced
Transatlantic Packaging company
18 end-of-life systems, 37+ sites, $2.4M+ of spend governed.
Make the cost of the estate explicit
An estate can continue operating while its underlying position deteriorates. End-of-life systems need attention. Overlapping applications create costs and dependencies. Workarounds can keep a process moving without resolving the underlying technology problem. The hold-period plan needs to account for what will be required to change that position.
Portfolio company IT cost reduction needs more than a list of applications to remove. A service may support a process that has no agreed replacement. A system retirement may depend on data migration or changes elsewhere in the estate. The programme needs to establish how a proposed saving becomes operationally achievable.
Exit introduces another requirement: evidence. The seller needs to explain the estate, its cost and the work completed or still required. A technology story is stronger when it is supported by a current position and visible assumptions. The work should address that requirement during the hold, rather than depend on a narrative assembled at the sale deadline.
Establish the baseline and the choices
Understand the cost position
We examine the estate and spend within the agreed scope. The objective is to distinguish the ongoing operating position from one-time change requirements and identify where costs depend on systems, suppliers or operational choices.
The baseline provides a basis for assessing options. Proposed savings need to be considered alongside implementation cost, timing and continuing obligations. A lower future run cost may require investment before it can be realised. That distinction should remain visible in the programme and the client’s decisions.
Prioritise the remediation
Legacy IT estate remediation starts with the effect on the business. We assess the systems and dependencies in scope, the work required and the implications of the available options. Priorities should reflect continuity, operating needs and the value-creation plan.
The programme may involve retaining, replacing or consolidating technology. IT estate rationalisation needs an account of what happens to the business process, data and support when a system changes. Removing an application from an inventory is not evidence that its responsibilities or costs have ended.
Carry the plan into delivery
We connect the agreed choices to work, sequencing and acceptance requirements. The programme makes dependencies and assumptions visible so the client can understand changes to the cost or timing position.
Heremba owns the technology workstream in scope. The client retains the wider operating decisions and financial recognition of benefits. We supply the delivery evidence needed to assess whether the relevant technology changes have been completed and what remains before the intended cost position can be achieved.
Deliverables for the hold-period plan
The engagement defines the depth and format of the following outputs:
- Estate and cost baselinethe systems, spend and dependencies within the agreed scope.
- Remediation priority viewthe issues to address, their operational implications and the basis for sequencing them.
- Options and cost assumptionsthe implications of retaining, replacing or consolidating relevant technology.
- Value-creation roadmapwork, milestones and dependencies connecting the baseline to the intended position.
- Delivery and decision recordprogress, outstanding choices and changes affecting scope, cost or timing.
- Retirement and acceptance requirementswhat must be established before a replaced service can end.
- Technology exit evidence packthe current position, completed work and unresolved requirements for buyer scrutiny.
Our Technology Discovery Framework and M&A Capability Maturity Model form part of the wider methodology. They support an evidence-led assessment and programme structure. The engagement still needs a specific baseline and a clear account of the business requirements behind the work.
Prepare an exit position the evidence can support
Technology exit readiness should make completed work distinguishable from work still planned. The seller needs a current account of the estate and the assumptions behind its operating costs. Any remaining remediation should have a visible scope and implication rather than disappear inside a general assurance about technology quality.
Where the sale story depends on the condition of selected datasets, Data Readiness & Assurance can provide an independent vendor data report. That is a separate assessment of data quality and readiness. It can complement the estate evidence without suggesting that technology remediation alone establishes the condition of every dataset.
The objective is to reduce avoidable uncertainty around the technology position. Heremba does not guarantee a valuation or exit multiple. The transaction outcome depends on factors beyond the agreed technology workstream; our role is to deliver the work and make its evidence available.
Where the work sits in the lifecycle
Within Our M&A Technology Framework, value creation and estate remediation sit through the hold period and support sale preparation and exit. Findings from Technology Due Diligence can establish priorities. Post-Merger & Bolt-On Integration may address acquisition-related change before or alongside the wider estate programme.
The scope should keep these assignments distinct. Integration delivers the chosen acquisition end state. Estate remediation addresses the technology position of the operating business over the hold. Their dependencies need to be connected even where the programmes have different objectives.
How the engagement works
We begin with the value-creation plan, available estate information, cost position and the decisions ahead. The engagement establishes which systems and spend are in scope, the outputs required and the reporting dates. The delivery timetable depends on the chosen changes and the operational dependencies they carry.
Heremba works alongside internal IT, finance, operating functions and suppliers. The plan identifies the work we own and the decisions retained by the client. Data access, supplier commitments and business acceptance requirements need to be established within that scope.
Questions deal teams ask
How do you distinguish savings from governed spend?
Governed spend describes expenditure brought within the programme’s oversight; it does not establish a saving. A savings claim needs a defined baseline, implementation cost and evidence that the relevant ongoing cost has changed. The client retains responsibility for financial recognition of benefits arising from the technology work.
Does remediation always mean replacing legacy systems?
No. The appropriate action depends on the operational requirement, risk and cost of change. Retaining, replacing or consolidating technology can each be appropriate within a defined scope. We assess the implications of the options and the dependencies behind them before carrying agreed decisions into the delivery plan.
How early should technology exit preparation begin?
Preparation should reflect the work required to establish the intended estate and evidence, rather than start from a standard period before sale. Remediation, system retirement and data assessment can have different dependencies. We scope those requirements against the hold-period plan and any known exit timetable.
What will a buyer be able to review?
The technology evidence can describe the current estate, operating cost assumptions, completed work and unresolved requirements. The scope determines the exact outputs. A vendor data report can provide a separate assessment of selected datasets. The seller and its advisers determine what is made available to prospective buyers.
Do you guarantee an EBITDA improvement or exit multiple?
No. We own the agreed technology work and make its cost, dependencies and delivery position explicit. The client’s operating choices and wider transaction conditions also affect outcomes. Any benefit claim needs supporting evidence; a programme budget or amount of spend governed must not be presented as savings.
For operating partners and portfolio businesses
The service supports private equity operating partners and portfolio-company decision-makers responsible for the hold-period plan. It also supports corporate owners preparing an estate for a sale or addressing technology weaknesses after an acquisition.
Bring the cost concern, remediation requirement or exit deadline. We can then discuss the technology work needed to establish and deliver the intended position.