What if we told you that you’re leaving money on the table at every portfolio company? Value-creation plans typically cover procurement, headcount ratios, and tech-stack consolidation. Most of them don’t consider the function that manages the headcount, so HR runs on the prior owners’ leftovers. That compounds with each company in the portfolio.
What You Usually Inherit
When you acquire a new company for your portfolio, you’re likely to inherit a patchwork of HR inefficiencies: overworked and understaffed HR departments, systems that don’t communicate, PEO contracts that haven’t been renegotiated, and more.
This often results in hidden costs. We see it manifest as duplicated headcount, compliance exposure, and slow time-to-value post-close.
Here’s how you can fix that.
Moving EBITDA by Streamlining HR
Standardize Across Your Portfolio
Are all your portfolio companies running their own HR policies, processes, and compliance practices inherited from prior ownership? That opens your firm up to portfolio companies going rogue.
One HR partner across the whole portfolio means one playbook: consistent policies, compliance, payroll, and onboarding. Beyond headcount savings, this ensures standardized onboarding, consistent policy enforcement, uniform compliance, and simplified diligence across every portfolio company.
Consolidate Headcount and Overhead
Fragmented HR staff across various companies poses compliance risk and increases administrative headcount. Using multiple vendors with systems that don’t integrate increases your risk of payroll errors or benefits issues.
Investing in a single outsourced HR model reduces payroll overhead, headcount, error risk, and administrative burden. That’s a direct, visible EBITDA add-back opportunity at each company in your portfolio.
Take Compliance Off the Table
Wage-and-hour claims, compliance penalties, and employment-practices liability: any compliance risk can turn into a major cost. If your portfolio has companies in different states, or even cities, compliance will look different at every location.
That’s a lot of risk to manage, especially during a hold period when a single claim can distort company performance. An outsourced HR partner takes that risk off your plate, standardizing compliance across each location, because that predictability matters as much as the savings.
The End Result
Selling a company is like selling a house. You’re listing your house, so you paint it, invest in a new roof, get it cleaned, and light a candle that smells like cookies. You want the house to look nice so the buyer can’t object to your asking price by pointing out all of the different fixes it’ll need.
That’s your reason for taking HR off the table. Having a strong HR foundation removes many potential buyer objections in their diligence process, ultimately making the companies in your portfolio easier to sell.
One HR Foundation for a 12-Company Portfolio
A private equity fund acquiring HVAC and plumbing companies had 12 independently run businesses and over 450 employees. It needed HR to keep pace with each new deal.
Leadership wanted to build a strong HR foundation across every portfolio company to ensure compliance, strengthen culture, reduce turnover, and streamline operations as they continued to scale.
PuzzleHR consolidated 11 different payroll systems into one, assigned a dedicated HR partner who meets with every portfolio company, added a recruiter for skilled-trade hiring, and provides on-call HRIS support as new acquisitions are integrated.
$287K: Captured in annual savings from HRIS consolidation
The Results
- 17 skilled trade positions filled, with more jobs posted
- Brought the portfolio’s time to hire to 38, a 43% reduction
- Reduced employee turnover by 35%
Read the full report here: https://puzzlehr.com/wp-content/uploads/Private-Equity_Scaling-HR-Infrastructure-Across-a-PE-Portfolio.pdf
Want to know what’s on the table across your portfolio?
We’ll run a complimentary HR cost assessment across your portfolio companies and identify where you’re leaving money on the table. Let us be the HR partner in your corner.
