Digital Transformation + Ideal Searchfund Target

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June 08, 2020

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

Hey Y'all,


Current Booth student with a background in Electrical Engineering and CS. I've worked in Industrial Data Analytics (Specifically IoT ) my whole career and am thinking through the Search Fund Model.

In my work experience I've helped transform manufacturing SMB from widget makers into service companies through IoT technology. For example, a conveyor belt company historically sells conveyor belt cleaners. These cleaners wear out over time and can damage the conveyor belt. Customers forget to replace these cleaners. If you embed an edge device with compute+comms+vibration sensor you can know the current “health” and status of the cleaner and automatically order new cleaners for the customer on a JIT basis. Thus you switch from selling cleaners on a per price model to “Uptime as a service”.

Has anyone done a a classic search fund deal for a high EBITA/recurring rev/growing industry company with plans to do operational/business model transformation to really accelerate growth?

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commentor profile
Reply by a searcher
from Georgia Institute of Technology in San Francisco, CA, USA
I am exploring a similar angle of operational improvements through digital transformation. My background is in Machine Learning and AI -- previously ran AI consulting firm that catered to fortune 500 focused on supply chain and treasury optimization. As I've been going through a similar search, the hardest parts are being able to identify targets where ML / Software investments won't lead to an increase in R&D Costs and provide improvements right away. It would be good to get into the nitty-gritty on this by breaking down cost reductions in specific aspects of model building, IoT hardware, and existing vendors.
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Reply by a professional
from University of California, Berkeley in Calgary, AB, Canada
Danny, digital transformation should have a broader scope. The customer journey is affected by technology, manufacturing, human capital, marketing, finance, etc. Every aspect of the company must be assessed to align it with the customer journey expectations. The goal is to serve the customers well, lower costs and increase profitability.

We are preparing a series of live streams that will touch on the different areas of digital transformation in a company. Stay tuned to the Evolve Business Alliance announcement.
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