Falcon’s Success Stories cast a spotlight on private equity-backed operators and the tools and tactics they leverage to create real value. In each entry, a world-class executive details a practical solution to a critical business issue. To be featured, contact us with the subject line “Success Story“.
Executive: Finance leader at a private equity-backed technology company.
Challenge: Lack of an upfront process to identify and track IT projects capitalizable under GAAP.
Solution: A consistent touchpoint between finance and IT to recognize capitalizable projects. Utilization of IT’s existing project management tool to create an auditable paper trail.
Most accounting groups are not proactive in the way they approach the business side of the house.
The typical approach is purely reactive – the numbers come in, and then the accounting happens.
But that approach results in missed opportunities to optimize EBITDA. Capitalization can be a huge driver of EBITDA, particularly in a private equity-backed environment. But if the intent to capitalize something is not established from the outset, capturing that value becomes far more difficult.
Last year, we committed to a more proactive, strategic approach to capitalization across the organization. The overall impact is projected to be over ten million dollars this year, with over six million realized to date.
One of the most important initiatives centered on pre-emptively identifying what IT projects qualified for capitalization.