Value Creation Plan

A Value Creation Plan describes how an investor intends to increase the value of a portfolio company. It defines concrete levers, such as growth, cost reduction, or acquisitions. The plan is the roadmap for the period between acquisition and sale. It is developed before the acquisition from the findings of commercial, financial and operational diligence and then agreed with management, because it only works if those who must implement it support it.

A structure by lever is customary, each with a measurable target, an accountable person and a date: price adjustments and portfolio pruning, expansion of sales and marketing, improvements in purchasing and production, tightening of working capital, digitalisation and process automation, targeted acquisitions and strengthening of the second management tier. The first months after completion carry particular weight, because reporting, management metrics and priorities are set in that phase. Tracking is essential: every lever is measured against plan, and deviations are discussed at board level. For the investor the plan is at the same time the basis of the return calculation, because the purchase price can only be justified if the assumed improvement actually materialises.

At exit, documented implementation serves as evidence for the next buyer. It has proved sensible to limit the number of initiatives, because parallel programmes quickly exceed the management capacity of a mid-sized company.