Portfolio company data collection: the request decides what can be compared
By Derwin Lucas ·
Summary
Portfolio company data collection is usually treated as logistics: which companies submit, in what format, by what date. It is also the point at which comparability is either preserved or lost. A request that asks each company for its close rate, its gross margin or its revenue receives a result. A request that asks for the counts, classifications and period rules behind each result receives something that can be checked, restated and compared. What is not collected at the source cannot be reconstructed later, and every analysis built on the collection inherits that limit.
Collection is a measurement decision
A finance team designing a monthly request is choosing, often without stating it, which questions the portfolio will be able to answer. Asking for a close rate as a percentage settles that the rate will be accepted as each company calculated it. Asking for signed contracts, contracts net of cancellations and demonstrations, as counts, leaves the calculation to be made on one basis for every company.
The second request is longer. It is also the only one of the two that supports a comparison.
Private equity data collection: how data arrives from acquired companies
In residential home services, data from acquired companies tends to arrive in three forms, and a request has to work with each.
- System connections. Direct connections to a company’s CRM or accounting system are the least common. Where they exist, they deliver records rather than results.
- Periodic exports. Exports from a CRM or accounting package are more common. They can carry record-level detail, but each system’s export reflects that system’s configuration.
- Monthly submissions. A spreadsheet template completed by each company is the most common form. It delivers whatever the template asks for, and nothing more.
Financial results frequently arrive on a different schedule from operating data, prepared by different people. A request that treats the two as one submission will often wait on the slower of them.
What a request has to ask for
Exhibit 1. One measure, requested two ways (illustrative)
| Request for a result | Request that supports comparison | |
|---|---|---|
| What is asked | Close rate, % | Signed contracts; contracts remaining after cancellations; demonstrations held; appointments issued |
| Definition | Each company’s own | Stated in the request, with the cancellation window and the month a contract belongs to |
| What can be done with it | Reported as submitted | Calculated on the portfolio’s basis; restated if the basis changes |
| What a mismatch looks like | Invisible | A count that does not fit the definition, raised before month-end |
In one illustrative month, the counts in the right-hand column produce close rates of 33%, 27%, 20% or 13%, depending on which are divided by which. A request for the percentage alone receives one of the four, and cannot tell which. See the arithmetic →
The same principle applies to financial lines. A request for gross margin receives a margin. A request for revenue, materials, installation labor, sales commissions and financing fees as separate amounts allows margin to be calculated on one classification for every company.
The rule for templates
Where a template is the collection method, it has to request every input that every calculation built on it requires. Where an input is omitted, any calculation that depends on it must say so when it is reported.
The rule is restrictive by design. A template that omits cancellations cannot support a net close rate, however it is labelled downstream. Stating the omission is what prevents a figure from appearing more complete than its source. Why a template doesn’t hold a definition →
The cost of asking later
A collection gap is cheap to close before the first submission and expensive afterwards.
- History cannot be recounted from results. A company that submitted rates for two years can be asked for counts going forward, but its history remains a series of rates on its own definition.
- A rate without its counts cannot be restated. If the portfolio adopts a new definition, figures collected only as percentages stay on the old one.
- Missing figures stay missing. A month not collected is reported as not collected. Estimating it creates a total that appears complete and is not.
Resubmissions and late figures
Companies correct their submissions. A cancellation recorded late, a cost reclassified after month-end, a missing invoice found during the close: each changes a figure that may already have been reported. A collection process that overwrites the earlier submission loses the record of what was reported and when.
Each resubmission is better kept as a new version, with its date, the person who submitted it and the reason. The portfolio can then show what changed, restate the affected periods deliberately, and answer a later question about why a figure in last quarter’s board pack differs from the same figure today. The same applies to late figures: a company that submits after the close is recorded as late for that close, and its figure enters the next version of the report rather than silently altering the last.
Companies at different stages
Acquired companies differ in what they can supply. A company running a mature CRM can export records. A company running on spreadsheets can supply counts if the template asks for them. A newly acquired company may be able to supply only the results it reported to its previous owner.
A single request can serve all three if it asks for the counts and classified amounts, and accepts that some companies will not yet be able to provide them. Those companies’ figures are then reported with that limitation stated, and the request records what each company would need to supply in full.
What does not need collecting
Comparability does not require collecting everything. It requires collecting the inputs to the measures that support consequential decisions: capital allocation, covenant compliance, valuation and incentive pay. For those measures, counts and classified amounts are worth the longer request. For the rest, a result may be sufficient, provided it is not later used for a comparison it was never designed to support.
Implication
The design of a collection request is the earliest and least expensive point at which a platform can protect the comparability of its reporting. Every system downstream, from monitoring software to a data warehouse to an AI layer, can work only with what the request asked for.
In Goverisyn, data can arrive by connection, export, extract or monthly submission, and every figure carries an evidence state that reflects what was collected: Substantiated, Qualified, Limited or Not Available. What each state means → For bringing a newly acquired company into this collection, see Acquisition KPI integration.
Goverisyn’s Portfolio Measurement Review works from what each company can supply today. The first step is a free 60-minute Portfolio Review, which needs no data in advance.
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By Derwin Lucas, founder of Goverisyn, with nearly three decades in management and information systems in home services. Published . About Goverisyn →