Growing into Disaster (Part I of a Series on Cost Optimization)

Alvarez & Marsal (A&M) is introducing a three-part series on cost optimization. The first release of this series entitled “Growing into Disaster,” is written for investors in portfolio companies that have historically increased value through revenue growth but are now delivering lower levels of profitability and facing challenges. Private equity investors often find themselves in situations where portfolio companies need to realize meaningful and sustainable improvements in cost structure. Companies in these situations cannot simply cut their way to efficiency – they need to change how they operate.

We are not saying don’t grow, we are saying grow smartly. Expansion and growth lead to increases in complexity, and with complexity comes additional cost. Without an efficient cost structure, continued prioritization of growth over efficiency can lead to situations where urgent change is needed to avoid “growing into disaster.”