Crowe Acquisition – Case Study

Recounting the Private Equity Group Journey With ITR Economics

Executive Summary

Doug Knoch, corporate development principal at Crowe LLP, has more than 22 years of experience at two private equity groups in the midwestern United States. In his private equity career, Knoch became aware of ITR Economics when his colleagues at various portfolio companies began working with ITR.

  • Knoch first learned about ITR Economics when a portfolio company of his private equity group became a client of ITR Economics in 2018.
  • Knoch began to build a relationship with ITR Economics when he attended an investment conference at which ITR Economist Lauren Saidel-Baker was a keynote speaker.
  • Knoch has a unique perspective on private equity groups’ many challenges and goals and how ITR Economics, acting as a Trusted Advisor, can lead businesses to growth and prosperity.
Crowe
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“As a private equity investor, one of the biggest challenges that I would often face came from working with a business’s management team...

With smaller businesses, they often have very limited or no experience putting together an annual budget, let alone a long-term strategic plan.” – Doug Knoch

Crowe

Challenge #1

Inexperience in Building Annual Budgets and Long-Term Strategic Plans

In Knoch’s experience, certain portfolio company management teams, particularly for small and medium companies, are inexperienced at building annual budgets and long-term strategic plans. These teams often rely on past experience and gut instincts as they forecast revenue growth rates in the markets they serve. Consequently, the annual budget and long-term financial models will often lack the relevant market size and growth data to support key assumptions about the company’s future growth. The lack of foundational market data results in less-substantive discussions between the company’s board and executive management concerning annual budgets, long-term strategic plans, and the quality of the company’s projections. 

Many engage ITR Economics to provide relevant, foundational market data for annual budgeting and strategic planning. ITR Economics provides clients with 12-quarter rolling revenue forecasts, leveraging its current market insights and library of datasets to give executive management and the board a third-party tool for benchmarking relative performance. This data-driven approach provides insights beyond management’s gut feelings, helping the executive board make informed decisions and adjust business strategies based on accurate data and market forecasts.

Challenge #2

Businesses Sticking to Old Ways of Leadership

Oftentimes in the private equity sector, investments are made in businesses that have never had institutional capital partners before. Many of these portfolio businesses are run by founders or their families, leaning heavily on tribal knowledge and experience rather than accurate data for their decision-making.

As these businesses grow, the increased complexity renders an instinct-based leadership approach impractical. However, leaving behind the old ways to transition to a data-driven approach is a tough pill to swallow for many business leaders, who have grown accustomed to their traditional and familiar ways.

ITR Economics has provided such companies with accurate data and analytics, which have helped management teams make more informed decisions and adjust their strategies according to market conditions. This, in turn, has benefited future budgeting and planning.

“The way ITR Economics helps consult businesses is a big reason why I was excited about this investment opportunity for Crowe...

The team doesn't come off as a bunch of eggheads and talk over people. Everything is spoken in plain English, and it is practical information.” – Doug Knoch

Challenge #3

Understanding Technical Economic Language

Over his career, Knoch has worked closely with several economists on complex analyses and pricing strategies. Despite working with numerous well-qualified economists over the years, Knoch and our clients often praise the team at ITR Economics in particular for our ability to explain intricate data and insights in clear, understandable, and actionable business terms.

Our practical communication style helps set ITR Economics apart from other experts in the field, who tend to rely on overly technical language. Clear communication is a significant advantage; it makes the insights provided by ITR Economics far more accessible and useful for business decision-making.

“The way ITR Economics helps consult businesses is a big reason why I was excited about this investment opportunity for Crowe. The team doesn’t come off as a bunch of eggheads and talk over people. Everything is spoken in plain English, and it is practical information.” – Doug Knoch

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How ITR Economics Can Help

Private equity groups face significant challenges every day. ITR Economics, with our accurate forecasts, hands-on team of expert economists, and reliable actionable advice, can help your business time its acquisitions and better anticipate the potential post-close challenges. Furthermore, we can help you capitalize on future opportunities on the horizon.