Profit Margin assessment rules when it comes to private equity deal success. Funds that accurately assess margin improvement opportunities during due diligence and capture those opportunities after acquisition are well rewarded. On the flip side, unrealistic expectations for margin improvement in the deal thesis can spell disaster.

The practical route to accurately assessing and realising the margin expansion opportunity starts with operational due diligence, as it provides a robust, realistic view of the target’s full potential.

Most target companies do not reach full potential to improve operations or to enhance the bottom line. There is always opportunity if one knows where to look. Using benchmarks and Product Teardowns, RASCO helps PE firms to make a disciplined march through the target’s cost structure—beginning with procurement, moving through to manufacturing & design of the product.