JBR conducted financial benchmark for family office

Assignment

JBR was asked by the client to perform a financial benchmark for a group of legal entities within the various divisions of the client's company.

Background

As an input to strategic discussions, there was a need for more insight into the performance of the various entities and how they performed compared to peer companies. The management team then decided to conduct a benchmark.

Concrete objectives of the benchmark were:

• Directing growth objectives and identifying growth areas
• Gain insight into returns for all capital providers and the shareholder in particular
• Gain insight into which divisions an investment will yield the best return and where adding equity in the future will yield the best returns
• Gain insight into solvency/leverage of own and peer companies

Problem Statement

To perform a good financial benchmark, a number of challenges are central. First, a financial framework must be established consisting of relevant financial KPIs. Here it is essential to create the right balance between the level of detail of the information and the labor intensity and possible complexity.

In addition, the most appropriate peer companies should be selected where careful consideration should be given to the comparability of the companies with respect to, for example, product portfolio and size of the company.

Data availability is often a challenge and should be identified as early as possible.

Our contribution

JBR set up a financial benchmark for each division, comparing the figures of each division with market peers. Five elements were important in the benchmark: realized sales growth, return on sales, capital turnover, return on equity and solvency.

Return on Invested Capital (ROIC) was used as a benchmark to determine a company's ability to create value for capital providers.A financial model for each division was used to compare the performance of the entities in recent years and qualitative knowledge of the specific sectors and companies was used to interpret the outcomes. Insights from this benchmark were used to define concrete strategic opportunities and next steps.

The result

The findings were discussed with the client at the end of each shuffle and then served as input for a strategic off-site with the company's Supervisory Board.

*At the request of the client, the name of the company is not mentioned.