Tag Archives: Operations Outsourcing

Introduction

The Sourcing Strategy is a process of data gathering, expenditure analysis, market research, negotiation, and contracting. In the 1980s, General Motors started employing systematic strategic sourcing. It strives to establish long-lasting, cooperative relationships with suppliers, who are seen as essential value partners. To ensure that the organization’s demands are consistently and effectively satisfied, the customer-supplier loop is evaluated at every point in its lifespan. Therefore, strategic sourcing is a lengthy process that requires qualified employees, effective technology platforms, and tools for execution.

Strategic Sourcing is becoming more common as digital transformation changes supply chain and procurement procedures. Analyzing what an organization buys, from whom, for what price, and in what quantity is required. The primary justification for purchasing a strategic sourcing suite, according to Gartner’s Magic Quadrant, is to transform sourcing within the company (74%). Businesses’ top motivations for engaging in strategic sourcing were greater significant savings (61%), and higher efficiency through automation (65%). A better understanding of supplier marketplaces can help companies identify potential risk factors and develop sourcing strategies to mitigate them.

Depending on the business, supply chain expenses, which primarily include transportation and procurement, can vary from 50 to 70% of sales. Therefore, investing a lot of effort in creating your organization’s strategy is essential. You may accomplish desired results and maintain alignment with corporate objectives by routinely assessing your sourcing strategy. A detailed grasp of a company’s business strategy, the resources needed to execute that plan, and the market dynamics and specific risks involved with managing techniques are necessary for successful sourcing.

The size of the worldwide supply chain analytics market is anticipated to reach USD 22.46 billion by 2030, showing a CAGR of 17.6% from 2022 to 2030 in a recent analysis by Grand View Research, Inc. As the need for handling massive amounts of corporate data and its insights for strategic applications develops, supply chain analytics is becoming more common.

Benefits of Sourcing Strategy 

It, as we all know, simplifies business operations. Some of the benefits are listed below:

Benefits of Sourcing Strategy

Benefits of Sourcing Strategy

Better Cost Savings:

Organizations may save money by having a legally established and well-defined sourcing strategy. You might start by choosing a few vendors who provide the best value. You may bargain for cheaper unit costs when making large purchases. Finally, the investment considers outside variables, such as market circumstances, optimizing earnings, and providing a competitive advantage.

Reduction and Mitigation of Risk

To mitigate potential hazards, strategic sourcing employs a cost-focused methodology. Businesses may do quality, financial, supply, and customer support risk assessments by looking at suppliers’ overall amount and value. Maintaining good ties with your suppliers might help you stay one step ahead of potential supply chain disruptions.

Continued Room for Improvement

It demands that the strategic sourcing procedures be continually assessed and revised. It is a constant cycle of improvement. As a result, they are allowing managers or executives to pinpoint problem areas and develop solutions around them. It also enables stakeholders to decide with confidence on matters like the future evolution of the business model, taking advantage of market possibilities, and maintaining competitiveness.

Enhancing and Identifying Ideal Suppliers

Strategic sourcing emphasizes profiling suppliers by assessing their core competencies and concentrating on the purchase cost. Through this method, businesses may identify the providers that best meet their needs for the maximum value creation or addition at the most affordable price.

More solid supplier relationships

Businesses set the groundwork for trust when they invest in improving their relationships with their suppliers. Companies may encourage their suppliers to deliver on the organization’s goals by including them in sourcing choices and making them feel appreciated.

Steps to Create an Effective Sourcing Strategy

Identifying and Classifying spending profiles

The sourcing efforts for each spending area will be prioritized with the aid of categorization. The criteria that better meet the needs of the business can also be devised, for example, direct vs. indirect spending. To assist in prioritizing and creating solutions in these situations, it is crucial to do a risk analysis of the selected spending categories.

Developing a Sourcing Plan

This entails determining the business unit needs that call for expenditure and setting goals, targets, and matching deadlines to meet the requirements. This calls for developing a communication pipeline so that all parties involved in the relevant sourcing initiatives know impending developments.

Market Study of the Suppliers

It examines the present and potential suppliers to comprehend and rate pertinent supplier profiles. It is necessary to investigate supplier market share to understand their position in the market, their level of industrial performance, and the threats and possibilities facing the supplier market.

Information Request to Supplier 

Request for information (RFIs), request for proposal (RFPs), and request for quotation (RFQs) from vendors is the next stage after finishing the supplier market research. It is crucial to convey the business’s specific requirements, as well as its end goals and performance expectations, to ensure that suppliers fully comprehend what the organization requires.

By identifying suppliers and carrying out the contracting process

This stage is to pick the suppliers that can provide the maximum cost savings while offering quality once the selection criteria have been determined. The contracting procedure begins to onboard the vendors after supplier selection for the pertinent sectors.

Evaluation and Regular Monitoring of Supplier Performance

Accurately assess how suppliers perform in comparison to the needs and goals of the company. It is crucial to monitor supplier performance regularly and pinpoint development opportunities. Organizations may use this information to evaluate supplier risks better and develop plans to minimize potential supply chain interruptions.

Principal Motivators for Automation of Sourcing strategy 

An Increase in Data Transparency

Strategic sourcing tools and platforms generate data on spending patterns, supplier performance, and supply chain risk assessment. This information, provided in reports, enables a comprehensive evaluation of all sourcing operations. Additionally, these discoveries may automatically start additional procedures depending on the business flow and legal environment.

Principal Motivators for Automation of Sourcing strategy

Principal Motivators for Automation of Sourcing strategy

Active Management

Automating the sourcing strategy procedures enables categorizing different expenditure activities using rule-based classification. Additionally, this procedure may be done in real-time, and the records will be updated immediately. As a result, you may have a single dashboard that shows the most recent, classified spending for the whole company.

Data-Driven Risk Evaluation

Every supply chain is prone to risks and failures in various ways. Businesses must be ready to respond to this risk, whether it manifests as interruptions, quality, or availability issues. An accurate risk assessment model is required to mitigate the harms brought on by internal and external threats, and an automated strategic sourcing method meets these criteria.

Greater Accountability

The flow of the sourcing process and any bottlenecks are shown on eSourcing platforms, which have a specified workflow mapped onto them. Greater accountability and improved compliance by all the parties involved in the sourcing projects are made possible by increased openness. 

Magistral’s Services on Sourcing Strategy

Magistral has extensive experience in research and analytics, which can aid in cost reduction through sourcing strategy. Some of the services are as follows:

Spend analytics:

Review expenditure profiles from the past and the future to find potential for supplier consolidation and tail spend optimization.

Cost and price analytics:

It guides informed judgments and creates scenario-based, predictive cost models and pricing estimates.

Supplier analytics:

Develop supplier sustainability scorecards, track supplier performance against Service level agreements, and create scenario models for bids and tenders.

Risk analytics:

Pay early alerts for category risks and supplier-related risk signals. With unique analytics that blends internal and external data sources to unearth hidden insights, you may advance your goal of digital procurement transformation.

Real-time recommendation:

Be a strategic partner to the company by recommending fresh, successful approaches to risk management, innovation, and cost reduction.

About Magistral Consulting

Magistral Consulting has helped multiple companies to reduce operations costs through its offerings in Procurement and Supply Chain.

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction          

An Investor Profiling summarizes an investor’s financial goals, situation, time horizon, and risk tolerance. It can assist individuals in making appropriate investment decisions. How much risk one should be willing to assume is determined by an investor profile. For example, a more conservative portfolio may be suitable if someone needs to preserve their money and have a short time horizon. If someone wants to expand their monetary liquid asset (cash) and has a longer time horizon, a more aggressive equity-based portfolio may be appropriate. The most essential quality of an investor is temperament, not intellect quoted to Warren Buffett.

The first step in creating a wealth plan is to analyze the ability to take financial risks. Risk tolerance is determined by duties, objectives, personality, and various other factors. A risk profile is created to accurately understand an individual’s ability to assume financial risk as part of their investment portfolio. There are two crucial components of an investor’s profile:  risk appetite and risk tolerance. Risk tolerance is the amount of risk that a person’s finances can endure, whereas risk appetite is the amount of risk that a person is willing to take.

Importance of Investor Profiling

Risk Profiling is vital for an investor. Before investing in the market, one thing which usually troubles every investor is risk. People are concerned about losing their investment capital or receiving less than expected returns; nevertheless, the risk is generally a mathematical figure, such as volatility, that can directly impact your investment capital.

Each investor’s tolerance for market volatility will be different. This disparity is caused by various variables such as income, obligations, age, etc. The quantification of investor profiling is risk-carrying capability and capacity.

Investment decisions are made on the risk-reward trade-off that an investor is prepared to make in the face of precarious financial markets. It is critical to assess your financial position before making an investment. Take into account your financial goals, risk tolerance, and time horizon to help you determine the investments that are best for you.

Risk factors involved in Investor Profiling

The three major risk factors involved in investor profiling consist of Risk need, Risk-taking ability, and Behavioral loss tolerance.

Risk factors involved in Investor Profiling

Risk factors involved in Investor Profiling

Risk need

The amount of financial risk that someone, as an investor, can safely accept depends on their circumstances. An investor who may be short on funds during retirement and wants to sustain their monthly cash flow may need to take certain risks to achieve their end goal. As a result, risk requirement is about how much risk you “need to take” as an investor. This capability varies depending on their age and other things. For obvious reasons, the risk-taking capacity decreases as age increases. If someone has a target goal and can save according to that, then he will need an annual return. The rate of return will define how much risk one can need to achieve their target. During investor profiling, financial advisers must calculate realistic potential returns and market risk environment for all assets based on historical growth rates and the current market situation. Failure to accomplish a goal should motivate you to save more money or work for extended periods.

Risk-Taking ability

Risk Capacity refers to an investor’s ability to take risks given his existing and ongoing financial status. That is; his or her net worth in relation to liabilities, financial ambitions, and time horizon for investing. It has the potential to reduce exposure to growth assets. One such sub-factor is the investment horizon. For instance, if someone has five years to reach their objectives, one must invest in safer assets because growth assets have high short-term volatility. Risk capacity, or dealing with financial loss, might also influence risk-taking. In terms of liquidity, if the need for liquidity is low in the stage of capital accumulation, then the risk-taking ability is high and vice versa.

For example, if someone is receiving a pension or has a future income or assets to sustain, and their objective is not fulfilled, they have a higher risk-taking capacity than otherwise.

Behavioral Loss Tolerance

Behavioral Loss Tolerance defines an investor’s psychological capacity to cope with market swings. This covers the reactions and responses to various market conditions, such as a correction phase. Behavioral loss tolerance is measured by exams, interviews, and questionnaires and specifies the utmost uncertainty one can accept. The amount of awareness regarding items and their experience over market cycles is determined by financial knowledge and investor experience.

Higher ratings on these criteria imply that investors can progress to growth assets. Risk composure shows the likelihood of acting irrationally in response to a perceived crisis, leading to losses. A trigger-happy investor sells stocks at the first hint of a market drop, whereas the patient investor holds on.

A better investor profiling strategy is feasible when all three components are reconciled and linked together. The investor’s risk appetite cannot exceed the risk tolerance of the aim. Higher risk-taking capacity may be ignored when both the need and the behavioral loss tolerance are low. When risk-taking capacity and behavioral loss tolerance are Higher, a lesser risk needs may be dismissed.

Combining all of these factors yields a genuine risk profile, which should be used to establish a suitable asset allocation mix or strategy, which may require the assistance of a professional financial adviser.

Types of Investor Risk Profile

Conservative

The protection of capital is the main priority of the investor, and they are ready to take minimal risks in exchange for limited or poor profits. The possible asset allocation is equity of 0-10%.

Types of Investor Risk Profile

Types of Investor Risk Profile

Moderately conservative

The moderately conservative investors are ready to take on a little amount of risk in exchange for the possibility of long-term gains. The possible asset allocation is equity of 10 – 30%.

Moderate

Investors are willing to accept a moderate amount of risk in exchange for potentially larger long-term rewards. This type of risk profile is most secure for the investor. The possible asset allocation is equity of 40 – 60%.

Moderately aggressive

To maximize prospective profits over the medium to long term, investors are willing to take on a high level of risk. The probable asset allocation is equity of 70 – 90%. 

Aggressive

The investor is willing to take significant risks to maximize long-term prospective returns and is aware that a major portion of their cash may be lost. The possible asset allocation is equity of 90 – 100%.

Magistral’s Process for Investor Profiling

A risk profile indicates the level of risk that an individual is capable and willing to tolerate and accept. The risk profiling process usually starts with analyzing and discussing the investor’s circumstances and the goals the investments or portfolio should achieve.

Standard Process for Risk Profiling

Standard Process for Risk Profiling

Investors may have various purposes, they may never have thought about or stated their aims in this way before, and they may not be able to capture encapsulate in terms of quantity or time.

Magistral makes sure to entail and enumerate each and every detail related to the client’s needs, and risk considerations during the investor profiling. The process for investor profiling is as follows:

Define Goals

Here we understand what the goals of clients are, in both the short term and long term. Moreover, we also focus on the goals aligned with the current financial status. By having a broad picture, we can then pave the correct way in order to maneuver in the right direction.

Risk Profile Questionnaire

In order to understand the risk-bearing capacity and the willingness of the client to take risks, it is imperative to know the levels of risk exposure of the client. This is done by sending a “Risk profile Questionnaire” to the client. After, filling it out, our team of experts analyzes the questionnaire in order to ascertain the optimum risk exposure of the client.

Scoring the Questionnaire

By having the requisite filter channels, within each category of questions and taking into consideration of various factors, we score each level of questions in tandem with the client’s requirements.

Analyzing and Examining

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand the various needs of the client needs in order to make an optimum risk profile.

Summary Close

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand. While onboarding the client we also deliver a summary of the procedure and the rules of engagement with clients.

Conclusion

Investor profiling is required for determining the optimal investment asset allocation for a portfolio. Because risk appetite is influenced by psychological characteristics, loss-bearing ability, investor age, income and costs, and other factors, each person has a unique risk profile.

Magistral consulting can help you complete a quick risk assessment to determine which risk group you belong to. We can perform the entire investor profiling process and then use this information to determine what percentage of your portfolio should be invested in which asset class.

Why Magistral consulting?

-We provide an exhaustive investor database which is helpful in finding the right kind of investor and beneficial in filtering out the information in concurrence with the existing market scenario and also providing tailor-made support in tandem with client requirements.

-Magistral consulting ensures analyst support at every step of Investor profiling. We have a dedicated team of experts for handling respective operations. In accordance to the client’s demands and specifications, we offer customized services. Considering various stakeholders’ concerns and implementing their diverse proposals.

-We provide a service of target company profiling. It is crucial for us to meet the specific  expectations of our customers by recognizing their requirements.

-It also provides Marketing and Communication support. We have a proficient team having experience in a variety of sectors and indeed the ability to handle different tasks effectively. We make sure to understand each and every client’s needs in a comprehensive manner and provide tailor-made services in an efficient manner.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Before committing funds to private markets, due diligence for private equity outlines a potential investor’s procedure for evaluating an investment fund’s appeal, value, financial sustainability, and prospects. It is often performed by analysts and such specialists and includes gathering and processing information about a fund’s historical investment record, finances, and other aspects. A limited partnership’s decision to contribute capital to a fund is based on the findings of the due diligence process. Institutional investors often use sophisticated due diligence methods for all their public or private transactions, but due diligence in the private market presents different obstacles.

Challenges faced in Due Diligence for Private Equity

Although all due diligence processes have basic features, due diligence for private equity processes has obstacles which are explained below:

Challenges faced in Due Diligence for Private Equity

Challenges faced in Due Diligence for Private Equity

Private Data

Because the target firm is not publicly traded, there is little information about it available than otherwise, such as through its SEC filings. The businesses that fund managers usually prefer to invest in are not publicly traded, making it difficult to get all the information a transaction team wants to feel confident.

Third-party data scrapers

Third-party providers providing private market data have now been considered to help with Due diligence for private equity funds. On the other hand, some data sources are more dependable and valuable than others. Some companies offer financial performance statistics scraped from publicly available information, often confined to a summary. Furthermore, some data sets could be too tiny for investors to trust their accuracy. Investors should seek primary-sourced data from a third-party private equity data provider rather than from pitch books or elsewhere online when evaluating a third-party data provider.

A lengthy process

It is frequently both a manual and time-consuming procedure. Investors are increasingly turning to technology to speed up and streamline their due diligence procedures, ensuring that the best decision is made.

Different Strategy

As many private transactions seem to be financial instead of strategic — i.e., the private equity firm’s sole motivation is to profit from the transaction – the unique perspective. In this case, a private equity deal team may devote more time to the financial components of the transaction than to the managerial or commercial parts, requiring far more information about the company’s financial status.

Confidential Information Memorandum (CIM)

The company’s confidential information memorandum (CIM), a vast document that includes financial data, a description of the management team, and commercial specifics such as insights into the customer base, products, and competitors, is often used to drive due diligence for private equity. On the other hand, Smart private equity firms do not rely only on the CIM and double-check the data.

The Steps involved in the Process of Due Diligence for Private Equity

Various steps are included in the process of due diligence, these include the following:

Steps involved in the Process of Due Diligence for Private Equity

Steps involved in the Process of Due Diligence for Private Equity

Industry Due Diligence for Private Equity

The first aspect of due diligence for private equity is a detailed investigation of the target company’s sector. Understanding an industry takes time and based on how in-depth the private equity purchaser wants to go, the process may involve accounting, tax, and legal advisers analyzing the nuances of the business. During their sector investigation, private equity buyers may discover other intriguing target companies or decide that a related industry is better suited to their investment criteria.

Due diligence in the target company’s industry is a transaction-specific exercise tailored to the private equity investor’s requirements. Knowing the industry in which the target company operates, its competitors, and market trends are all part of the exercise. In such an exercise, the investor considers if the specific target industry is growing and how profitable an investment in that sector will be.

Quality of Earnings Assessment 

Although the financial portion of due diligence for private equity examines the same papers as any other due diligence procedure, it emphasizes the ‘quality of earnings.’ Separating extraordinary revenues and expenses from past income statements examines what the target company can earn on an ongoing basis.

By removing these remarkable factors from the financial figures, the private equity client should get a more realistic picture of how the company is expanding and how it is expected to continue. The ‘quality of earnings’ analysis can be as in-depth as the private equity buyer requires. It could, for example, include a worst-case scenario in which several of the target firm’s top clients cancel ongoing contracts and analyze the impact on the target company.

Legal Due Diligence for Private Equity

The deal team must be confident about proceeding before the firm invests time and money in legal due diligence for private equity.

Legal due diligence examines the legal ramifications of the transaction, in part to confirm the firm’s assumptions, validate that the firm is not exposed to unanticipated liabilities, and ensure that the firm is in compliance with all laws and regulations.

Legal due diligence for private equity deals should focus on the following areas:

  • The legal ramifications of a change of power at the target firm.
  • Regulatory constraints of the target company.
  • Agreements for exclusive supply or purchase.
  • Contractual agreements with current vendors, suppliers, and customers and how the transaction affects them.

Operational Due Diligence for Private Equity

Any private equity transaction aims to improve the target company’s operations and rise in value before leaving the investment after a set period. As a result, the deal team will work with financial and legal experts to identify all the prospects for value-generating operational changes at the target firm. Due diligence is learning about a manager’s internal processes to safeguard investors from losses caused by operational errors or, in the worst-case situation, fraud. With limited money and time, this can be not easy. On the other hand, Minor infractions might fuel larger ones and build a culture in which practices or norms are increasingly considered toothless guidelines. Investors can choose fund managers measured based on and clear idea of the necessary operational risks, improving the quality of their portfolios and avoiding potential reputational risk and economic loss.

Future of Due Diligence for Private Equity

Asset competition has been intense, and it is expected to continue. More investors are vying for a smaller pool of assets, and potential targets’ management teams are less capable or willing to devote time and resources to responding to diligence demands. As a result, due diligence for private equity companies is growing more complex as they increasingly analyze more data and look for ways to make purchases more efficient.

-Due to market conditions, private equity firms have had to reconcile risk mitigation and wealth development.

-More technology and analytics will be used, and more sell-side investigation.

Firms can do the following to fulfill the intention of making the diligence process much more efficient and digital:

-Utilize data and analytics technologies to generate quicker, more actionable insights by embracing digital diligence.

-Integrate sell-side diligence into their procedures the proper way.

-To the degree that it can underwrite investments, focus on value generation.

-Improve ESG diligence by collecting and analyzing data more consistently.

Magistral’s Services on Due Diligence for Private Equity

Magistral Consulting’s due diligence for private equity services ensures that an asset generates healthy returns. The services include:

Industry Research

With the acquisition target in mind, the target industry is examined for potential headwinds and tailwinds and short- and medium-term security and returns.

Due Diligence

A detailed corporate profile is created utilizing primary and secondary research to detect any risks.

Due Diligence Questionnaire

This service involves the preparation of due diligence questionnaire leading to further analysis with targets and investors.

Primary Research

Exploratory interviews with all stakeholders at the Target Company, including management, employees, ex-employees, vendors, and investors, are done to uncover any future liabilities.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is in Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

The Importance of Procurement

In any organization, the procurement department plays a vital role in the successful development of a product. The procurement department, whether related to the fast-moving consumer goods industry or retail, generally refers to the procurement of raw materials. However, the procurement department can be associated either with business continuity activities such as inventory purchasing or for business support like that done for the Information technology department. It is therefore evident that this resource needs effective management. This is where category management comes into play.

According to a study, companies that have successful category management programs have a mean lead supplier time of only 6 days vis a vis the normal time of 14 days.

Some key points associated with the global markets that are to be noted here are:

-Transportation and logistics activities account for 10-12% of global GDP.

-The United States is ranked tenth in terms of trade logistics performance.

-According to 50% of respondents, the transformative capabilities of technologies such as advanced software and AI have a significant impact on their performance.

-It is expected that by 2024, more than 60% of G2000 manufacturing organizations will use advanced technologies such as AI to cut costs by up to 20%.

What are Category Management and Category Intelligence?

Category management is a strategic approach to acquiring raw materials for manufacturing. While sourcing is all about making the right purchasing decisions, category intelligence assists an organization in making the right purchasing “yes” or “no” decisions. This not only aids in resource optimization but also cost reduction.

The term “category intelligence” is not new, but it is surprising that even after the introduction of best practices for category intelligence, category managers have failed to maintain effective category intelligence documents.

The image below illustrates four broad areas that an effective category intelligence system affects.

Category Intelligence in Supply Chain Management

Category Intelligence in Supply Chain Management

The Role of a Category Intelligence Manager

This is a specialized role in which a category manager is responsible for a specific function or category of goods or services, such as the purchasing department or stock maintenance units. The role could include a variety of responsibilities ranging from procurement to strategic sourcing, as well as developing a sourcing plan and reporting.

In general, these functions are becoming more specialized, with category managers increasingly requiring specialized degrees in their respective domains.

Process of Category Intelligence

Identifying opportunities, translating trends, understanding the factors, providing guidance, and understanding stakeholder needs are all steps in the category intelligence process. These are explained in greater detail below:

Process of Category Intelligence

Process of Category Intelligence

-Identifying Opportunities: This step helps to cut down the cost, reduce the risk of competitors and increase the efficiency of the organization.

-Translate major trends and industry events: The second most important step is to translate these events into an actionable strategy that can be broadly put into categories.

-Understand the underlying drivers: All the underlying factors must be understood completely to understand what will be their business impact.

-Timely Guidance: Time-to-time guidance is provided to reduce the risk in the long-term sustainability of the business.

-Understand evolving business needs and stakeholder demands: This is done to ensure that the strategies and approaches are fitting well.

How category intelligence helps

Intelligent procurement or having an effective category intelligence system can help an organization in several ways. Also known as intelligent procurement, it simply means managing all aspects of vendor spending in one central digital place so that one can have a holistic view of their spending.

-Access to market intelligence:

Sourcing managers will have to keep track of multiple sources of information in order to be on top of things. For example, procurement of food grains requires one to not only be up to date with the prices but also the prices in different markets, the supply and demand dynamics, and the cost implications of various decisions.

-In supplier selection:

Finding the right supplier for an organization can be a challenging task as it requires risk evaluation as well as things such as how reliable a supplier is. This can consume a considerable time as the search for the right supplier entail testing their services as well as making a decision on the long-term reliability of the supplier for an organization.

-Curbing excess spending:

A quick response to changing market dynamics is one of the core tests to check the effectiveness of an efficient procurement department. An effective category intelligence system helps curb any excessive spending by the procurement department by providing correct information and helping in making effective predictions and decisions.

According to a study random, unplanned buying can account for 30-45% of all indirect purchases while in the case of smaller organizations it can account for almost 80-90% of the indirect purchase.

Category intelligence reports empower the procurement department to better negotiate the pricing and terms of agreement with its suppliers.

-Assessing supplier performance:

Getting past data or historical information about the suppliers and establishing benchmarks to assess the performance of suppliers is a difficult challenge for any organization.

A good category intelligence system envisages correcting this situation by not only providing access to data but also benchmarking and forecasting. A good category intelligence report aids in listing KPIs and benchmarking data thereby assisting in effective supplier management.

-Tracking multiple sources of data:

Effective category intelligence helps in tracking multiple sources of data from several marketplaces thereby ensuring ease in information handling. Having an on-demand intelligence system helps with access to previously unknown sources of information such as market size, market potential, and supplier coverage for businesses seeking to grow. Such an intelligence system helps a company in taking care of decisions at a local as well as a global level.

-Time-saving:

Category intelligence systems not only help in cost savings for a firm but also saves considerable man hours required for gathering and processing data.

Magistral’s Services on Category Intelligence:

Our Category Intelligence services help clients stay on top of indirect categories like Marketing Services, Professional Services, Travel and Lodging, MRO, Information Technology, HR, Transportation, and Utilities, among others. Our insights help corporations build the right category strategy with significant cost benefits.

Our major service offerings are:

-Demand and Market Supply Analysis:

In this analysis, we make category landscape reports, create the demand drivers, identify major players and analyze through Porter’s 5 Force model of analysis.

-Pricing Movements and Forecast:

In Pricing movements, we study the various pricing strategies and perform primary research to obtain quotations and RFPs.

-Major Players and Profiles:

Major company profiles are identified and SWOT analysis is done on them to manage the risk of the companies.

-Negotiation Strategy:

In this analysis of pricing is done and also competitive analysis is taken care of.

-Newsletters:

In this service, newsletters are made, also the developments across the categories are tracked proactively.

-Custom Intelligence:

Here, we provide custom direct and indirect sourcing.

-Impact Assessments:

In this, all the events are assessed like Geo-political events, Natural disasters.

-Category Dashboards:

It is created to have a comprehensive view of category and impacting factors.

About Magistral Consulting

Magistral Consulting has helped multiple companies to reduce operations costs through its offerings in Procurement and Supply Chain.

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Investment Banking is a special type of banking that helps organizations or individuals raise capital and provides consulting services to them. It helps in conducting large complicated transactions such as mergers or acquisitions or raising an initial public offering (IPO) using underwriting.

Investment Bankers are experts in the field of finance who have their fingers on the pulse of the market. As acknowledged worldwide this is one of the most complex financial mechanisms in the world.

As has been the case with different sectors, it has been for some time now that organizations have started investment banking outsourcing services to third-party vendors as well. Outsourcing one means giving the authority to outsource one of its services to these third-party vendors so that the company can save on operating costs and get specialized services from highly skilled staff- all this while ensuring adequate data security and adherence to regulatory compliances.

This helps organizations not only streamline their services but also provide value-added services to customers that they couldn’t have thought about earlier.

It is important to note that the nature of investment banking outsourcing and the services provided by vendors have evolved alongside technological advancements. The first and foremost is business digitization, which has resulted in increased transparency and visibility for clients, as well as a better end-user experience for customers. This has resulted in improved strategic partnerships and, as a result, higher quality work being outsourced by investment banking outsourcing clients, which can only be met with strategic partners.

Challenges Faced by Investment Banks

Modern investment banking faces various kinds of challenges that are listed below:

Challenges Faced By Investment Banks

Challenges Faced By Investment Banks

Scarce Capital Resources

Due to recession and depression all over the world, almost all markets, companies, and individuals are not comfortable investing their money in the capital markets. This has created a world where capital resources have become scarce. The job of an investment banker is to invest capital more efficiently, but due to the scarcity of resources, there is a reduced business for investment banks in general.

Need to Reduce Costs

Markets have become more competitive. As a result, the cost of goods and services is decreasing. This has an impact on the finance industry as well. Investment banks’ margins are shrinking, and thus their cost of capital is decreasing. As a result, they must reduce costs to encourage their investors to invest money.

Increased Regulations

The new structured products created and sold by investment banks go through strict regulations since the mortgage crisis in 2008. This creates a limit on the operations of investment banks. These increases cost for investment banks and they have to maintain a different department of qualified professionals so that they could create and bring in new investment opportunities after scrutinizing them.

Technology Disruptions

Rapid technological advancements have drastically altered every industry in the world, including investment banking. The fintech industry has emerged over the years as new technology. This industry revolves around providing the same financial services at a lower cost. They have access to cutting-edge technology and a modern network, allowing them to raise capital at a lower cost.

Cross Selling Complexities

A huge area of the investment banking services sector relies on cross-selling. For example, if someone is looking for mergers and acquisitions, the investment bankers provide them with the services such as issue management, capital structure advisory, and many more. This way they bring value to their clients. But due to limited budgets, they are limited to the services they offer. The declining budget causes decreased revenue for research and other departments.

Benefits of Investment Banking Outsourcing

There are several reasons why investment banking outsourcing is becoming increasingly popular. We have tried to highlight some of these reasons below. They are:

Benefits of Investment Banking

Benefits of Investment Banking

Focus on Core Business

Investment banking outsourcing can help companies in focusing on their core competencies rather than focusing on mundane tasks and being worried about their day-to-day operations.

Controlled Costs

Cutting operational costs is a challenge that exists with organizations throughout. Investment banking outsourcing provides an avenue where companies can take care of differences in the relative value of currencies to derive as much as 30-50% savings in costs.

Increased Efficiency

Investment banking outsourcing is a specialized operation and the workers who work for these banks need to be highly skilled for this. A similar talent of MBA’s exists in low-cost destinations like India where the operations can be outsourced to them. Highly skilled talent helps in improving the efficiency of investment banking services.

Changing Economic Factors

In today’s uncertain world, the political dynamics are changing daily. This has an impact on the economies of the world and since we are so intertwined today the ripple effects of adverse conditions in a globally connected country are bound to have effects on the whole world. Investment banking outsourcing ensures the risks are well hedged with specialized partners operating from different geographies across the world.

Technological Changes

Investment banking outsourcing has ensured that the companies are up to date with the latest technological advancements that are occurring worldwide at a fraction of the cost had they invested real-time into adopting them. The use of the latest technologies by third parties ensures that all the technological challenges are met.

Time Zone Advantage

The gap in time zones between your country and the area you are outsourcing to, in addition to the cost advantage, is another important benefit. By doing so, you can focus on your primary tasks all day long while also having finished your day-to-day operations by the time you get up the next day. It gives you the benefit of round-the-clock business operations.

Magistral’s Services on Investment Banking Outsourcing

The outsourcing of investment banking may be a way to cut operating expenses. In an era of growing complexity in both established and new industries, investment banks are extremely nuanced. Smaller investment banks have a difficult time juggling their project pipelines and manpower needs. Medium-sized banks are eager to develop their expertise in emerging industries, which are bustling with activity and volume. However, large banks are more concerned with cutting costs while maintaining the quality of the services they provide to their customers. Magistral provides a range of service options to support Investment Banks.

Some of the services that are associated with Investment Banking Outsourcing that is offered by Magistral consulting are:

-Deal Sourcing: Performing industry and market analysis, finding potential targets, and publishing newsletters are various kinds of services provided under deal sourcing.

-Data Cleansing: Data cleansing and mining are done to perform analysis on suitable data.

-Valuations: Valuations are done by creating financial models by various methods such as LBO/DCF Modelling, Comparable Analysis, Precedent Transaction Analysis, and Impact Analysis.

-Due Diligence:  Research-based due diligence both primary and secondary are performed to uncover the true potential of an asset while giving a completely independent opinion on investment quality.

-Deal Execution: Teasers and Investment Memorandums are made along with identifying the potential investors/buyers.

-Portfolio Management: Providing ESG compliance monitoring, preparing financial reports, business development support, and procurement support is provided.

-Equity Research and Analysis: The services provided under this head include fundamental analysis, quantitative analysis, credit analysis, and country analysis.

-Marketing: This includes creating white papers, case studies, thought papers, CRM management, etc.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates, and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModellingPortfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Transportation Analytics in a supply chain refers to the movement of products from one point to another. It starts at the beginning of the supply chain when supplies arrive at the warehouse and goes to the end-user when the customer’s order is delivered right to their door. Because of its importance, warehouse managers should investigate transportation in their supply chains. In the end, this is the only method to cut total expenses in a scenario where transportation can account for up to 60% of total operational costs or a significant amount of a company’s supply chain costs. Few activities in the supply chain have as much of an impact on business as transportation selection. Delivery techniques ensure that deliveries to and from the business go smoothly and reach their destinations on time. Because transportation is crucial to the company’s performance, it is critical to incorporate it into the supply chain management strategy. Transportation is regarded as one of the three essential components of supply chain management because of its importance.

Transportation analytics rapidly power mobility information and insights, altering transportation planning by making vital data collection and understanding more accessible, faster, cheaper, and safer. Cities, transit agencies, transportation departments, and other entities increasingly turn to transportation analytics to solve challenges, prioritize investments, and gain stakeholder support.

The transportation analytics market was worth USD 15.65 billion in 2021 and is predicted to grow to USD 77.33 billion by 2029, with a CAGR of 22.10 percent from 2022 to 2029. Because of its ability to simplify commercial and personal transportation, Predictive Analytics accounts for the most prominent type of segment in the corresponding industry.

Usage of Transportation Analytics

Big data is heavily used in supply chain management to evaluate operational hazards, improve communication, secure proprietary data, and improve supply chain accessibility. This data is used by industries in a variety of ways, including predictive analytics and the creation of more efficient cloud-based platforms.

Usage of Transportation Analytics

Usage of Transportation Analytics

Predictive Analytics

Data mining, statistics, and machine learning are used in predictive analytics to assess future supply demands, inventory, and customer behavior. Companies use predictive analytics and machine learning to forecast future physical hazards in the supply chain and financial, customer, and other operational risks.

Cloud-Based Platforms

Cloud technology will be critical in the future of transportation and supply chain management. It can help lower costs by reducing the influence of physical/geographic barriers, merging, and replacing various in-person processes, mitigating some of the consequences of market swings, and consolidating and replacing various in-person processes. Optimized data, on the other hand, is critical to the success of cloud-based platforms. Data must be effectively recorded, transmitted, and used to profit from cloud technology fully.

Cloud storage has its own set of security concerns. As more businesses and industries migrate to the cloud, fraudsters will find the technology increasingly appealing. In addition to the protections provided by cloud providers, businesses should always examine what security measures are needed. Larger companies also often use many cloud providers across their operations. Companies must have solid policies for preferred vendors, best practices, and the involvement of internal IT teams in this situation.

Role of Transportation Analytics Professionals

The growth of e-commerce has led to higher expectations on speed, agility, and visibility. Manufacturers, merchants, and consumers have pushed transportation and warehousing companies to develop quickly to meet ever-increasing service demands. Transportation management is evolving thanks to supply chain technology fueled by data and analytics—these practical tools aid businesses in being more educated, efficient, and long-lasting.

Role of Transportation Analytics Professionals

Role of Transportation Analytics Professionals

Monitoring

Technology has catapulted the business beyond simple track-and-trace data into a new world of supply chain visibility in just a few years. Customers can now not only follow their items as they travel, but they may also receive text or email notifications when delivery vehicles are stationary for an extended period. The same information can show whether delivery is within a mile of its destination, allowing receiving facility managers to plan and avoid surprises. This increased awareness has ramifications that go beyond on-time delivery. Companies will be able to carry less inventory due to this data because they can precisely pinpoint their products’ locations and when they are needed. Over time, this could result in significant cost reductions. Data is also allowing for more personalization and control in the transportation industry. Internet of Things (IoT) sensors in trailers now allow drivers and dispatchers to watch and report on temperature, humidity, movement, and other vital elements in real-time, allowing them to intervene before a problem arises.

 

Fleet Management Systems

The use of fleet management technologies is also helping to improve transportation efficiency. Vehicles communicate with systems regularly, getting information such as how long they have been on the road, where they are going, and which route would be the most efficient. These solutions cut down on idle time for drivers, improve fuel efficiency, increase safety, and cut down on paperwork. This continuous connectivity between trucks and warehouses or manufacturing facilities also allows for increased flexibility and real-time responses to unanticipated incidents. By increasing transparency in the transportation business, digital freight platforms enable enterprises to think beyond today’s shipment. Thanks to technology, shippers may see regional trends, individual lane cost information, and driver preferences, while carriers can get specifics like loading/unloading durations and lane history data. All this information can aid in lowering operating costs without compromising service.

Vehicle-to-Vehicle Communication

Finally, data will play a part in one of the most intriguing breakthroughs in transportation: platooning, in conjunction with other technologies. Platooning is a method of transporting three or four trucks through the lengthy segments of the highways. The lead vehicle requires a driver, while the other tracks follow a digital tether a short distance apart. All vehicles respond with near-zero reaction time because the lead vehicle controls its speed, direction, and braking. When the platoon is within range of a destination, it pulls over to a designated parking lot, where each truck is greeted by a driver who will guide it to its delivery location. Because only one driver will be needed for every three or four trucks on the road, this application will save money on driver labor. It has the potential to improve traffic safety by reducing human error and accelerating reaction times. The technique also reduces vehicle distance, boosting the road network’s ability. Platooning is also good for the environment. Vehicles that travel at a constant, controlled speed emit less CO2 and consume less fuel. Tests have already shown that this technology can save a three-truck platoon up to 11% on gasoline expenditures.

Magistral’s services on Transportation Analytics

Magistral’s services support a strong customer focus and guarantee that goods are delivered on time to customers, regardless of location. They also optimize routes and safeguard profit margins without losing delivery timeliness. They also understand and negotiate a more complex logistics landscape, with more options than ever. Other services include:

Carrier Profiles: It includes pricing, suitability, specialization, and other important parameters while deciding on the type of transportation.

Dashboards and Visualization: KPIs development and tracking help in measuring the performance of the overall business.

Logistics Management: This step includes fleet optimization, last-mile delivery, and process management. All these services help in the acquirement and storage of the goods.

Data Science: This is done to identify areas of improvement for delivery and quality while reducing costs.

Contract Management: This helps in the preparation of contracts, bid management, vendor shortlisting, and negotiations.

About Magistral Consulting

Magistral Consulting has helped multiple companies to reduce operations costs through its offerings in Procurement and Supply Chain.

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

 

A Brief Introduction

Consumer and market insight report and analyze consumer behavior, information, and feedback. The comprehension and analysis of these insights assist adjustments to customer support systems and business development. Companies collect feedback using customer surveys, statistics, reviews, and focus groups to understand the underlying attitudes underlying consumer behavior and decision-making processes.

There is no formal definition of consumer and market insight, but it may be summed up as any measurement that can be utilized to observe and understand what customers think and feel. It might be their eye movements when viewing your page, how long they spend on it, how much they order, which options they choose, etc.; the list is endless. While certain information may be utilized alone to make a specific determination, marketers often use a variety of consumer insights to make their decisions.

Consumer marketing insights are also crucial when testing new initiatives within your company. You may learn from consumer insights how placement on the page, product details, SEO, and many other aspects affect your sales. Businesses employ consumer insights to understand their audience’s thoughts and feelings more deeply. Companies may better understand their customers’ needs and wants, and, more crucially, the reasons behind those needs and wants, by studying human behavior, which is likely to boost revenue and brand value thus.

Sector concentrating the more spending on market research 2020, by sector

Sector concentrating the more spending on market research 2020, by sector

Consumers today have virtually limitless store options and complete freedom over how they assess and interact with media and companies. In the wake of the COVID-19 epidemic, research has revealed that 81 % of consumers would continue reorganizing their spending this year, while 46 % of customers have experienced new expenditure restraints.

Benefits of Consumer and Market Insight

Consumer and market insight has the power to create or destroy a marketing plan. This dependency on data monitoring has only increased across all businesses considering the COVID-19 outbreak. Businesses and consumers are switching to a digital-dominant strategy enabling more precise insight measurement. Consumer insight may help determine the characteristics your consumers are seeking and find demands that your rivals are still not meeting. Social media and search engine trends might be helpful in this regard. To stay informed about what your target audience is searching for, you may set up alerts for movements and rivals.

This takes us to a further advantage of consumer insights: They provide a detailed picture of how you may compare your company to others’ businesses in ways other than sales and revenue. You can see how you compare to your rivals on various business-related terms regarding search engine rankings. 71% of consumers expect companies to deliver personalized interactions. 3/4 will switch if the customer doesn’t like the experience, so it’s vital to keep care of the customer experience.

Build effective category strategies that increase sales and promote sustainable growth by utilizing solid, impartial, and contextualized insights. Make quick judgments based on proactive information and forward-looking insights to stay one step ahead of the competition. Data and information make it easy to mitigate risk and identify strategic priorities.

How to get Consumer and Market Insight

Utilize social media analytics

According to a research survey, only 1.9 % of marketing executives said their businesses have the skills to use marketing analytics. With the popularity of social media as a tool for marketing, companies may communicate directly with their customers and discover their precise attitudes and responses to their offerings. Nowadays, many social media platforms have survey and questionnaire tools that can also give valuable information about consumer attitudes or behaviors. YouTube analytics, google trend and analytics, and google audience retention tools are the best source of collecting marketing insight.

Getting Consumer and Market Insight

Getting Consumer and Market Insight

Conduct surveys

Getting direct customer input is a terrific method to learn about the industry. Many businesses opt to do this by sending out feedback forms as soon as a client connects with or purchases their product or service. They may follow up later to obtain a more comprehensive customer experience analysis.

Access to public data

Because of the internet, businesses now have access to an infinite quantity of data, much of which is public information. When deciding on their marketing strategies, companies might utilize information about consumer buying patterns, financial situations, and the condition of their respective industries or economies.

Conduct market research

Focus groups are typically gathered as part of market research, a traditional method for businesses to collect data for market insights. These test subjects’ responses might offer valuable information about how the broader public might react to a particular product, service, or marketing campaign.

Customer feedback

Asking clients for feedback is one of the simplest methods to obtain consumer insights. However, there is a need for this. To guarantee that their customers feel comfortable sharing, brands must develop trust.

The impact of global consumers has changed

The transition of consumers to digital has increased significantly. Gen Z customers have created applications to discover extra food and purchase more goods online. People are preferably buying more on online sales or in big billion deals.

73% of Indian consumers return the product after shipment, so the company’s return policy should be easy to attract the customer and create trust. Myntra had 8 million orders during its end-of-reason sale in which 5 million buyers bought 4,636 brands. In the sale, 10 shirts were sold every second, 3 pairs of jeans were sold every second, and 17 sarees were sold every second, which signifies consumer behavior. Sales influence consumer behavior, those not in need also buy something.

44 % were undecided or made three or more assertions that they disagree with near shopping sustainability. A 23 % rise in expenditure across six or more categories was forecast by consumers worldwide. In the six months starting in April 2021 and concluding in September, 24 % of consumers worldwide do not anticipate increasing their expenditure in any category.

How to use Consumer and Market Insight

Set your goal

A list of questions and objectives is often where research starts. Determine the data type needed to finish your analysis before asking for input. Data on consumer demographics, corporate reputation, brand awareness, product issues, market rivals, and customer service initiatives may be included in the objectives for consumer insights.

Choose the research methodology

The research techniques you choose will depend on the information and results you are looking for. Data on consumer demographics and public relations may be found through focus groups and customer surveys. In customer evaluations and surveys, suggestions, and issues with goods, features, and customer service may come up. Pick the best approach to serve your research’s objectives and produce the most satisfactory outcomes.

Conduct research

Install data gathering technologies to compile information from sales processes and website visits or assemble participants and ask them to share their perspectives. Customers who respond to surveys and provide feedback frequently receive rewards from businesses. To gather information for analysis and determine consumer happiness, solicit and record consumer insights.

Analyze the result

You may find and visualize common issues, trends, and causes that arise among your customers by analyzing the outcomes of the data you collected. Create a graph or written report to summarize customer data and examine patterns like demographics, consumer behaviors, and product issues. Improvements and modifications that address frequent difficulties and feedback can be made using knowledge of the reasons and reactions that occur most frequently.

Apply changes

Consumer insight and market research are primarily used to develop and improve products that better fulfill the demands of consumers. Product development and marketing teams build solutions and work to answer customer complaints after collecting and evaluating the data. The organization’s understanding of customer service is demonstrated using these enhancements.

Why Magistral Consulting?

-Customer insight: Utilize tools like social media sentiment analysis, U&A insights, N.P.S. tracking, bespoke surveys, and more to stay current on consumer trends, requirements, and purchasing patterns to identify focus areas and create successful marketing plans.

-Market expansion: Receive timely, essential insights and evaluations of markets and regions to aid in partner selection, local market intelligence, understanding of shifting legal and regulatory environments, and developing successful ready strategies.

-Updated information: Proactively updates on recent and pertinent developments in your markets and categories will help you find new opportunities for innovation and growth.

-Expert insight: A comprehensive understanding of your company’s possibilities and difficulties by combining data from internal, external, and third parties. We have expertly selected insights on markets, categories, rivals, and consumers to assist your commercial and marketing teams in making more informed strategic decisions.

-Custom tools: You may create world-class category growth strategies fast and easily using pre-built templates and unique tools.

About Magistral Consulting

Magistral Consulting has helped multiple companies to reduce operations costs through its offerings in Procurement and Supply Chain.

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Private Equity (PE) consulting has been around for a while. Many consulting firms have practices offering private equity consulting services. It is interesting to note that even global consulting firms rely on offshoring to a great extent to deliver value to private equity clients on their most pressing issues. Offshoring reduces costs of consulting firms and some of it must be passed onto the clients (we hope!!). But what if all the advantages of offshoring could be passed onto the clients directly?

Read further to know more!!

Private Equity Consulting and Offshoring: Why it’s a match made in heaven?

Management Consulting as an industry has been around for more than 100 years on the back of its solid value proposition for clients. It brings in expertise, experience, political leverage, data sources, network, and usually signs business outcome-based projects with the clients. Usually, benefits outweigh the costs by 3X to 10X.

Private Equity Consulting and Offshoring

Private Equity Consulting and Offshoring brought together

Offshoring also picked up with the advent of the internet. As the work was possible with the help of the internet and advanced communication options, offshoring started to make sense for low-end jobs like call centers and data entry. It was followed by IT and now it is the turn of high-end research, analytics, and consulting jobs. The value proposition of offshoring is cost efficiency and scale. In most cases, offshoring also results in improvements in terms of quality and delivery apart from cost-cutting.

When we combine the forces, we have the impact of consulting with the cost advantages of offshoring, making it an unbeatable value proposition for clients in their marketplace. Management consulting overheads like weekly flights for consultants, high-end hotels for stay, and highly-priced consultants, all of which are paid by the clients are reduced by remote working and service delivery. At the same time, task offshoring to a group with all the expertise in a given industry brings a scale that can be taken advantage of, by smaller clients.

Business Outcomes for Private Equity Industry and the Services Offered

Major work streams at all private equity companies, big or small, comprise of following workstreams:

Fundraising and marketing or investor relations

Deal origination

Deal execution along with due diligence; and 

Portfolio management to get into the operational details of portfolio companies to make it more valuable

Private Equity Consulting Business Outcomes

Private Equity Consulting Business Outcomes

Magistral's Service Offerings for Private Equity

Magistral’s service offerings for Private Equity

Here is how Private Equity consulting helps in these workstreams

Fund Raising and Marketing/ Investor Relations

A fund is established when it has a healthy pipeline of potential investors apart from the existing ones. This is the area where most emerging managers struggle. The game does not even start if the firm is not able to raise the angel fund. However, like everything else in life, robust results need time and consistent efforts. PE consulting helps reach out to the investors and maintain a continuous touch-point to drive home the value proposition of the fund and thus enable successful fundraising rounds.

 

The services that help in fundraising are

Fundraising documentation

Fundraising requires a lot of documentation. Sometimes it could be enormous for an emerging manager. At the same time, it needs to be streamlined for established managers. Magistral helps prepare documents like Private Placement Memorandums (PPMs)/ Confidential Information Memorandums (CIMs), pitch decks, financial models and projections, teasers, and strategy and marketing documentation.

Investor profiling and reach-out

Funds specializing in different areas have different ideal profiles for investors or limited partners. Magistral helps in profiling and reach out to these investors. Magistral also has an in-house database that carries leads of more than 15000+ Limited Partners (LPs) and General Partners (GPs). It can also access databases of other players if the task needs it.

Design and Data Support

Magistral has an in-house design team that streamlines the PowerPoint designs and makes them consistent with the global marketing standards. It’s like we receive the content in raw form, sometimes scribbles from a notepad or whiteboard, and the output is a well-designed PowerPoint that could directly be sent to investors. Similarly, pitch decks and PPMs could also be designed to look more powerful visually. Likewise, data could be streamlined related to investors or CRM systems that the clients use.

Newsletters

Multiple touch-points with investors mark content like Newsletters, PoV documents, Industry reports, and market research. Magistral has experience working with hundreds of clients working on these assignments. It has access to resources like secondary sources, interviews with the panel of experts, and triangulations to come up with market sizes, etc. Worthy content establishes the authority of the Private Equity fund in the eyes of accredited investors.

Sustainable Investment and Impact Assessment

We have a specific service offering around ESG analysis, sustainable investments, and impact assessments of the current or potential assets acquired by the Private Equity firms.

Deal Origination

Deal origination services make sure that the focus of the GP is on the suitable targets and populate the deal pipeline with more appropriate deals, to be taken up as and when required. Picking up the right deals is the lifeblood of PE operations. It’s by picking up the right deals that a GP can offer superlative returns to its LP investors. Magistral helps with Deal Flow support and Inbound deal flow analysis.

The deal origination related services offered are:

Industry tracking and landscaping

A Private Equity firm needs to scan the environment for investing continually. It needs to track its key markets, geographies, and industry regularly to take advantage of emerging trends. Magistral has helped multiple clients in tracking industries like healthcare, SaaS, blockchain, cybersecurity, heavy engineering, and many others.

Potential target identification

A list of suitable potential targets is generated using secondary and primary sources. As per the investment thesis, the targets satisfy a host of customizable criteria like revenue, profits, employees, industry, geography, and being open for investments. Secondary sources include databases, whereas primary sources are industry associations, accelerators, angel investor groups, etc.

Target company profiling

Once the list is generated for potential targets, the next step is to shortlist the companies of interest and go for a deeper dive.  A target company is profiled for its business details, strategy, latest developments, management, SWOT, Porter’s 5 forces, and other customized information. Understanding the openness of the company for an investor on the board is also studied at this stage.

Target pipeline management

For deals to be continuously happening, the pipeline needs to be populated continuously. There should be deals in all stages of deal-making. That is ensured by filling the targets in the funnel on an ongoing basis.

ESG Analysis

ESG or impact analysis is more critical than it was ever before. It’s imperative then that Private Equity firms evaluate the deals for ESG fitments. A company that performs better on ESG frameworks is a more sustainable investment and makes a far-reaching impact on the society and communities it serves.

Inbound deal flow management

If a firm receives lots of inbound inquiries, there needs to be an agency to sort out the worthy opportunities from the non-serious ones. Magistral matches the opportunities with the GPs investment thesis and brings forward the best deals.

Summarizing and preparing IMs:

If start-ups send IMs, the same need to be summarized for discussion with the investment committee. Magistral summarizes the Investment memos into investcomms decks for quick and effective decision making.

Deal Viability Analysis: This involves getting into the nitty-gritty of a deal, identifying red flags both inside out and outside in, to make sure the deal produces the impact, which is the aim of the investment to start with. This is achieved from the exhaustive and comprehensive market and company research.

Deal Execution and Due Diligence

Deal execution and due diligence ensure the right investment decisions to produce significant returns, identifying risks for better planning post-investment or M&A.

Here the services are about providing all the foresight and intelligence to make the right decisions. The primary service offerings here are:

Target company due diligence

Here, Magistral takes access to the data rooms and analyses the information to produce highly relevant deliverables and insights. Due diligence includes financial, operational, and ESG related aspects of a firm. Magistral works with both Private Equity firms and Investee companies. It prepares Due Diligence Questionnaires (DDQs) and collects information from the investee companies, either directly or indirectly.

Industry Research

Here, industry research is more specific and has to do with the target company’s operations. The industry in which the target operates and details like trends, SWOT, Porter’s five forces, key competition, pricing trends, news. etc. are captured to provide a holistic view about the industry in which the target company operates

Detailed company profiling and competitive intelligence

In this stage of the company profile, details are captured from multiple sources like ex-employees, management, existing employees, vendors, competition, investors, and industry stakeholders. Also, information related to competition and their strategy is captured using primary and secondary sources.

Investment Memorandums

If the investment needs to be made with other co-investors, standard documentation is applicable like Investment Memorandum, Confidential Information memorandum, Pitch Deck, and Financial Models.

Modeling and Valuations

This exercise ensures that deal is made at the right prices so that there is a significant upside for the investment returns. Magistral has prepared 100+ financial models for valuations in industries like SaaS, tech, healthcare, IT, manufacturing, B2C retail, fashion, chemicals, and e-commerce. Here the information and assumptions required to prepare a financial model are captured from detailed discussions with the client. The models in which Magistral has expertise include and are not limited to 3 parts financial models, LBO analysis, DCF modeling, Real Estate modeling, precedent transaction analysis, comparable analysis, and impact analysis.

Portfolio Management and Fund Management

Portfolio Management aims at maximizing the value of the investment in a company by a Private Equity firm. This is achieved by supporting various tasks of the acquired company to reach more customers, hence improving revenue or reducing operations’ costs. Fund Management is about streamlining the functions of the fund itself to focus on the core tasks of investing and fundraising.

Here the services are:

ESG Compliance Monitoring

Magistral, after assessing the ESG maturity of an investee company, suggests a set of metrics monitored periodically after the investment is made. The data is collected on these metrics and reported to the board and management along with investors every quarter.

Outsourced CFO

Outsourced CFO services are relevant for both funds and the portfolio companies, specifically in the cases where the PE firm invests in start-ups or smaller firms. These companies may not be in a position to invest in a full-time CFO and thus may go for an outsourced CFO that is fractional and provides the operational and cost flexibility. Sometimes Financial Process and Accounting could be outsourced, while CFO could be kept in-house. These tasks include accounting, bookkeeping, administration, procurement, and preparation of financial statements

Outsourced Fund Administration

This service is specifically for funds and takes care of all the administrative aspects of the fund like fund accounting, expense monitoring, trade reconciliation, distribution waterfalls, taxes, fees, incentives, expenses, etc.

Strategy and Business Development support

After the investments, most PE firms focus on growing the revenues of the portfolio companies. This is done through a slew of interventions on strategy and marketing. Magistral supports these activities by providing services like consumer and market studies, new product or market development, lead generation, which is critical in the B2B space, and finding follow-on acquisition or buyer for the investee companies.

And this is how Private Equity consulting joins forces with offshoring to provide an unbeatable competitive advantage for our clients.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Investment Management Outsourcing for Emerging Managers

Operations outsourcing by financial institutions is a trend that is fast picking up. Though bigger banks had taken a lead over other investment management firms earlier, now is the time for highly specialized firms like Investment Banks, Private Equity, Venture Capital, Real Estate, Family Offices, Hedge Funds, and Asset Management firms to take advantage of outsourcing. The reasons for the same are quite simple. It leads to cost efficiency and improvement in operational flexibility with absolutely no dilution in terms of quality. It leads to quality improvement with an experienced vendor who is working with multiple clients like you. Though it’s easy to understand how it leads to benefits for an organization on a headcount of hundreds and thousands. However most vital is the support for emerging managers.

Benefits of Outsourcing

There are multiple benefits of outsourcing for financial institutions big or small. Here is how they could benefit if they are considering outsourcing

Cost Advantages

Outsourcing is typically delivered from a low-cost country like India. India is behind western countries in terms of Purchasing Power Parity (PPP). If ten dollars can buy you a burger in New York, it might buy you a 2-bedroom flat in Delhi. I hope you get my feeble attempt at humor. A fine dining experience at the cost of a burger may be a better analogy. The point here is that you can get the same quality at a far lesser cost if it is delivered from India. Depending on your location, there is a potential of saving 30-70% of the operational costs, with virtually no impact on continuity or quality. The potential of savings is meaty for geographies like the United States, the United Kingdom, Europe, and Australia

Remote workforce

Covid 19 has re-laid the rules of working forever. Remote work is now going to be a mainstream option even for demanding careers in investment banking and investment management. Whether the Analyst works from New York or New Delhi, there is little difference. There is little reason then, to not work with the brown guy based out of India!!

Quality

Outsourcing has low-quality connotations. Yes, outsourcing did start with low-end jobs like customer care and call centers, but that was a couple of decades ago. Now there have been waves of outsourcing and with every wave, the type and quality of outsourced work improved. After call centers, it was IT. Now it’s the turn of financial management and Research and Development that is riding the wave. Quality is better than in-house work. The reason for that is the outsourced team works with far more similar assignments than an in-house team. This is all the more important for an Emerging Manager who are still picking up the ropes of operational quality and scalability

Databases

The assignments related to fundraising, deal origination, deal execution, and due diligence require access to multiple databases. If a firm goes for signing up for each database, it ends up being a big cost bucket. With an outsourced player, these costs could be controlled as the vendor’s costs are distributed over multiple clients

Scaling up and scaling down

An emerging manager is thin on the workforce. So, when the deals come in, there are times, when the deal pipeline is more than what the current team could handle. The ad-hoc arrangement can lead to a loss of quality. Outsourcing is a perfect solution for this situation. Experienced resources are available on short notice and churn the assignments that are at the level of global quality

Flexibility

Multiple outsourcing models exist, where a Full-Time analyst can work with you from an offshore location like a virtual employee. Or you can subcontract the work on an hourly basis or give out a project on an ad-hoc basis. Whatever is the model, the quality of the work remains steady. You are always in control of the costs too

First Mover Advantage

Outsourcing for high-quality critical work has started to pick up. It is just a matter of time, that they would eventually be delivered from offshore locations. The companies that pick on this trend earlier have a competitive advantage over other players in terms of pricing their services. In-fact developing comfort working with teams that are dispersed across geographies is going to be a competitive advantage not only for financial services but across industries. Emerging Managers gain massively from this trend as it gives them a pricing advantage with their initial set of clients.

Magistral’s In-House Investors Database

Magistral has an in-house database, that carries records of 25000+ global Limited Partners and General Partners. This database is priced to suit the budget constraints of emerging managers. This is by far the cheapest such database. Even after being priced so low, it is an effective way to get started on reaching out to investors.

Time Zone difference

The work happens while you sleep. Not that, someone sits with a laptop beside your bed and works, but time-zone difference ensures that your operations effectively move both in the day and the night. In the day onsite teams move the work, while in the night, due to time zone differences, the offshore team moves the work. Offshore teams pick up the work from where it was left by the onsite team. Assignments effectively move at double the pace.

 

As these are the general benefits of outsourcing to all players, big or small. For Emerging Managers outsourcing is absolutely critical as this may be the only way to start the operations on a shoestring budget of Emerging Managers

How does outsourcing help Emerging Managers?

Operations Costs

When Emerging Managers are starting up, money that can be spent is always an issue. Outsourcing keeps the costs low and that is exactly what is required at that stage. This is also relevant for start-ups in the investment management space.

Operational Know-how

Emerging Managers may be experienced, having worked for many years before going on their own. At the same time, they could come up with a new idea and may have limited experience in the traditional areas of fund management and fundraising. Outsourcing may bridge the gap in terms of know-how as the outsourced vendor may have helped the clients in a similar space.

Flexibility

An outsourcing vendor offers unmatched operational flexibility like having a resource working on a specialized assignment just for a week, or designing a pitch deck by an experienced designer in a couple of days. This flexibility is also extended when it comes to prices of services.

Agility

Emerging Managers enter a space based on a few assumptions about an industry and its potential. After entering the market, there may be a realization that potential may not be there or maybe suspect. Also, there is a need of changing tracks multiple times during the initial days in the business. Here hiring for a set requirement when the business is not established can lead to loss of flexibility.

How to go about Outsourcing?

If you have read, so far, I suggest you check our website www.magistralconsulting.com. Please feel free to write in and ask for our work samples and client references in the areas where you need support.

Magistral Consulting has helped multiple Emerging Managers in establishing their operations on shoestring budgets. The offshore team is capable to deliver projects related to the complete value chain of the investment management like fund-raising, deal origination, deal execution, and portfolio management. To schedule a discussion please visit here

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family OfficesInvestment BanksAsset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE fundsCorporates and Portfolio companies. Its functional expertise is around Deal originationDeal Execution, Due Diligence, Financial ModelingPortfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.