The standard playbook is working against you
If you’ve acquired a company in the last decade, you’ve had this conversation. The PortCo is running on aging technology. Maybe it’s a legacy ERP that’s been customized over 20 years. Or maybe a mainframe that only two people in the building still know how to maintain, and those two people are watching the retirement countdown clock.
The instinct when facing that situation is to modernize: to replace the old system with something current and scalable that can grow with the business.
That instinct is also costing PE firms money they don’t have to spend.
A full ERP implementation consumes the hold period before it returns a dollar
A full ERP implementation is not an IT project. It’s a capital-intensive operational overhaul that requires cleaning and migrating historical data (routinely underestimated and frequently the thing that blows up timelines), managing vendor dependencies, retraining people, redesigning processes, and absorbing an adoption dip before the system stabilizes.
Even in manufacturing, where conditions are about as favorable as they get for a new ERP implementation, you’re looking at 18 to 24 months before the system is fully viable and the organization has stopped absorbing the disruption. In a five- to seven-year hold, that’s a significant portion of the window consumed by a project that hasn’t returned a dollar of value yet.
ERPs are well-marketed and, in the right circumstances, the right answer. But they’re also fraught with implementation risk, require enormous capital, and have historically struggled with adoption. For many middle-market companies, the system PE firms have traditionally reached for is also the system most likely to absorb value rather than create it during the hold period. That’s the paradox.
The question worth asking is not which ERP—it’s whether you need one now
PortCos still need to automate manual processes, improve data visibility, and make faster, better-informed decisions. What’s changed is the assumption that a full ERP replacement is the only path to those outcomes.
New systems don’t communicate with their competitors by design. There’s no commercial incentive for them to make data movement easy, which means that problem lands on the PortCo.
Building a unified data platform on top of existing systems gets the same visibility and automation without the multi-year implementation drag. It works regardless of whether the underlying technology is a 30-year-old mainframe or a modern stack whose components simply don’t talk to each other.
A targeted data build gets to value in weeks, not years
Take a manufacturing PortCo where a team of four analysts spends a full week every month pulling together indirect spend data from across the business. It’s manual, it’s slow, and the number they produce is already aging by the time it reaches the CFO.
With a targeted data build, that spend data can be consolidated in four to eight weeks. The same report that required a week of human effort runs automatically. The analysts move to work that actually requires judgment. The CFO receives near-real-time numbers instead of last month’s approximation.
That is a deliberate fix to a specific, expensive problem. It’s not a transformation initiative. And you can complete five of those in the time it takes an ERP implementation to finish its first phase. Each one hits a real pain point. Each one shows up in EBITDA.
Clean, usable data compounds at exit, and it makes the ERP easier if you need it later
The downstream effect is direct. Eliminating manual reporting cycles, improving procurement visibility, and providing accurate data to management earlier in the hold are real efficiency gains that also elevate the asset in a buyer’s estimation. A PortCo that can demonstrate clean, accessible data across its operations is a more transparent and more scalable acquisition target than one still mid-implementation on a system that has not stabilized.
The value compounds further when executing a roll-up strategy. A product line that’s a natural upsell into another company’s customer base stays invisible as long as each company’s data requires manual assembly to access. A common data structure makes that customer overlap visible.
It’s also worth saying directly: this approach does not foreclose the ERP question. If a portfolio company eventually needs a full implementation, having clean, consolidated data makes that project faster and less risky. The data work is foundational either way. The choice isn’t between a data platform and an ERP. It’s a question of sequence, and of what generates value inside the hold period.
A note on security
Regulated industries will ask about data security, and they should. Industry-standard certifications and each PortCo’s own data classification and retention policies apply throughout. The specifics vary by industry, whether HIPAA, PCI, or others, but this isn’t a model that trades security for speed.
The firms winning on value creation have the most usable data, available earliest in the hold
PE moves fast, and the technology environment is moving faster. The firms that will outperform on value creation over the next five years are not necessarily the ones with the most sophisticated ERP. They’re the ones whose management teams are making decisions from clean, current, consolidated data, starting in the first 100 days of the hold, not the last.
The sequence matters. Build the data foundation first. Target the specific operational pain points that move EBITDA. Preserve the ERP option for later, on better terms, with cleaner data underneath it. Each step inside that sequence generates value. The full implementation, pursued in the wrong order, absorbs it.
About the authors
Justin Bolles
Chief Technology Officer @ Resultant
Justin’s intrigue with solving problems has been a driving force propelling him throughout his long consulting...
David Federico
Partner, Head of M&A and Transaction Services @ Resultant
David Federico leads the M&A and Transaction Services practice at Liberty Advisor Group, a Resultant company,...
