How to compare performance across acquired companies
By Derwin Lucas ·
To compare performance across acquired companies, first establish that every company is measuring the same thing. A comparison holds only when each brand counted the same event, over the same population and period, with evidence behind its figure. When those conditions aren’t met, the gap between two brands can be a gap in definitions rather than in performance, and the report alone won’t tell you which.
This guide covers why numbers from acquired companies rarely compare at face value, the four things a comparison requires, the common mistakes, and where to start. All figures are illustrative.
Why numbers from acquired companies don’t compare at face value
Acquired companies arrive with their own systems, definitions and reporting habits, and those differences survive consolidation.
A platform built by acquisition might run one brand on a dedicated CRM, another on a general-purpose one and a third on monthly spreadsheets. Each reports a close rate, a cancellation rate, a gross margin and brand EBITDA. The labels match. What sits behind them often doesn’t:
- A lead can be any contact, a homeowner who asked for an estimate, or only a scheduled appointment.
- A sale can be a signed contract, a contract net of rescissions and financing declines, or a job that has reached production.
- Gross margin can be stated after sales commissions, before them, or before installation labor.
- Brand EBITDA can be stated after the brand’s share of shared-service costs, before it, or including proposed add-backs.
A consolidated report can add these figures together. It can’t make them mean the same thing.
The same records can produce four close rates
In one illustrative brand’s month, the same records produce close rates of 33%, 27%, 20% and 13%, and every one is calculated correctly.
| What counts as the sale | Divided by | Close rate |
|---|---|---|
| Gross sales: 10 | 30 demonstrations | 33% |
| Net sales, after cancellations: 8 | 30 demonstrations | 27% |
| Jobs in production: 6 | 30 demonstrations | 20% |
| Jobs in production: 6 | 45 appointments issued | 13% |
If one brand reports the first figure and another reports the last, the second appears to close at less than half the rate of the first. Their selling doesn’t have to differ at all.
Gross margin behaves the same way. Where financing fees, installation labor and sales commissions are booked can put one P&L’s gross margin anywhere from 29.9% to 62.0%: about 32 points, none of it performance. See the arithmetic → What a definition costs: twelve cases →
Common mistakes in cross-brand performance measurement
Most comparison errors come from treating a shared label as a shared definition.
- Ranking brands on figures nobody has reconciled. A ranking built on mismatched definitions rewards the brand that measures most generously. The brand that looks best may just measure differently.
- Filling gaps with estimates. An estimated brand makes a total look complete when it isn’t. State the gap instead.
- Reading revenue as performance. Revenue tells you how large a brand is, not how well it performs.
- Comparing brand EBITDA before agreeing shared costs. In an illustrative 25-brand portfolio, eight brands that each leave out about $150,000 of shared costs look $1.2 million more profitable than the brands that carry them. How to make brand EBITDA comparable →
- Treating a reporting template as a definition. A template standardizes the boxes. It doesn’t standardize what goes in them.
Comparability is established, not assumed because two numbers share a name.
The rest of this guide is how.
What portfolio KPI comparability requires
A comparison across portfolio companies requires four things, each resting on the one before it: the measure is defined, scoped, substantiated and comparable.
1 · Define the measure
Agree what the measure means at portfolio level before you compare anyone against it.
Write the definition down: the event that counts, what it is divided by, and the month an event belongs to. Then record where each brand’s own definition differs. You don’t need a portfolio definition for every metric, only for the measures that drive a decision such as capital allocation, covenant compliance or valuation.
2 · Scope it
Know exactly which brands, periods, records and exclusions sit inside each figure.
A total that covers 22 of 25 brands is a different total from one that covers all 25, and it should say so. A partial year set against a full one, or a newly acquired brand counted for three months against brands counted for twelve, changes the answer before any performance enters it. Missing brands are stated, not estimated.
3 · Substantiate it
Trace each figure to the records behind it, and state the limits where you can’t.
Record-level data lets you recount a brand under the portfolio definition. A monthly template that reports totals supports less: you can see what the brand submitted, but you can’t recount it. A brand that submits a rate without the counts behind it can’t be restated at all.
4 · Rule on the comparison
For each comparison, decide whether the evidence supports it, and keep the reason with the answer.
There are three outcomes. Where a brand’s records allow, restate its results under the portfolio definition and compare them. Where the records support comparison only with a qualification, such as partial coverage or aggregate evidence, compare with that limitation attached. Where they can’t support the portfolio definition, report the number without comparing it, and say why.
Applied to the four close rates above: if the portfolio defines a sale as a contract net of cancellations, divided by demonstrations, a brand whose records hold both counts is restated at 27% and compared. A brand that reports only its own 33% rate, with no counts behind it, is reported at 33% and not compared, with the reason stated.
In Goverisyn, every figure also carries an evidence state: Substantiated, Qualified, Limited or Not Available. What each state means →
You don’t need common systems to compare brands
Comparing acquired companies doesn’t require moving them onto one CRM or ERP.
Migration is slow and expensive, and it is often unfinished when the board asks its question. The definitions can be agreed and applied while each brand keeps its own systems of record, working from connections, exports, extracts or the monthly submissions it already sends. Systems standardization may still be worth doing for other reasons. It isn’t a prerequisite for comparable reporting.
Where to start
Start with one measurement that drives a consequential decision, and test it across a few brands before extending it.
Pick the measure your board or sponsor already relies on, often close rate, gross margin or brand EBITDA. Write down how each brand calculates it. Then establish which comparisons hold. Goverisyn’s Portfolio Measurement Review does this across selected brands. The first step is a free 60-minute Portfolio Review, which needs no data in advance.
Start with a Portfolio Review.
60 minutes. No data needed in advance.
By Derwin Lucas, founder of Goverisyn, with nearly three decades in management and information systems in home services. Published . About Goverisyn →