Acquisition KPI Tracker & ROI Forecasting

The Challenge

A large South African insurance business acquired a controlling stake in a smaller insurance business. The acquirer knew how much they spent on the acquisition and knew their desired return on investment, but was unsure of the targets to set and KPIs to monitor to achieve the desired return, running the risk of the acquiree underperforming without timely detection.

Our Solution

Our team performed an analysis of competitors of a similar size and market to determine achievable and acceptable growth levels and ratios. We created a model capable of showing KPIs of competitors by accepting Income Statement data to calculate historical metrics. The model accepts forecasted metrics for the acquiree and forecasts their Income Statement along with resulting KPIs. It compares actual to forecasted figures as the period progresses and displays everything in a user-friendly format with charts and graphs, enabling management to quickly identify shortfalls and calculate Return on Investment on both a forecasted and actual basis.

The Results

Management could quickly identify areas of underperformance by the acquiree based on forecasted and expected KPIs when comparing to actuals. This enabled data-driven decision-making, allowing management to allocate resources and propose improvement plans early enough to still achieve the required Return on Investment.

Similar principles and techniques can be applied to most forecasting and budgeting projects, where industry and historical performance are analysed to predict future performance while retaining the ability to modify inputs and see their effects in real time.