How Bain helped the newly merged MediaCo find $300M in working capital
How Bain helped the newly merged MediaCo find $300M in working capital
When two big multinational media companies merged, the CFO realized they’d need even deeper insights into the finances of both businesses to manage their working capital. They brought Bain in to help shorten their cash conversion cycle and increase their free cash flow.
These teams applied their media and financial expertise
Consultants led the project and worked closely with leadership to diagnose MediaCo’s net working capital opportunities and develop a plan. Bain’s capability experts and data scientists used their expertise in modeling to provide a clear view of the company’s current state, and all the levers they might pull to improve things. Bain then spent several months helping the client implement the plan.
These teams applied their media and financial expertise
Consultants led the project and worked closely with leadership to diagnose MediaCo’s net working capital opportunities and develop a plan. Bain’s capability experts and data scientists used their expertise in modeling to provide a clear view of the company’s current state, and all the levers they might pull to improve things. Bain then spent several months helping the client implement the plan.
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Bain Capability Network (BCN)
The BCN team provides case teams with analysis and expertise. Its working capital center of excellence analyzed the prior 12 months of third-party purchases and opportunities to understand what levers MediaCo could pull to improve its working capital, such as extending payment terms. They also helped the client view working capital and metrics across the combined organizations.
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Executive / Manager Assistant
Executive Assistants and Manager Assistants manage schedules and make travel arrangements. Here, they interfaced with clients and their assistants to ensure meetings went well and projects progressed.
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Finance
The Finance team helped track, measure, and analyze performance.
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General Consulting
Consultants led the case. They reviewed its short and medium-term working capital targets and helped the treasury, finance and business teams create and then execute new action plans. Bain consultants also helped with project governance, management, and tracking, and advised on improving the accounts receivable collections process. They then transitioned the implementation to MediaCo’s teams.
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Legal/Risk
The Legal & Risk team helped our client teams negotiate agreements for the engagements, partnerships, vendors, data, and more.
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Product, Practice, and Knowledge (PPK)
Knowledge managers provided consultants with valuable intelligence on working capital best practices, project management, and capability-building. These ideas helped the consultants deepen their understanding of the topics at hand and generate an immense amount of value for the client. After the case was complete, the knowledge team produced best practices and playbooks for future cases.
Background
Two of the world's largest multinational media companies merged to create the combined MediaCo, and it was a gargantuan undertaking. They hired Bain to support that merger, from evaluating the feasibility all the way through to integrating the two companies. Bain supported “day one” readiness, planned for the organizational and cultural change, and assessed how the combined entity could amplify the strengths of each prior one.
That project was a success and one year later, MediaCo rehired Bain to help open a new, US media production hub that wasn’t based in the typical locale—New York or Los Angeles—and which could unite their production teams.
After that work, MediaCo’s CFO sought to initiate a third workstream to understand the company’s working capital. Cashflow wasn’t as expected, and to understand that shortfall, they hired Bain to examine all their business units and build systems to provide deeper financial insight across all.
The plan
Bain’s consulting, capability, and data science teams conducted an eight-week diagnostic that quickly confirmed the CFO’s hunches. MediaCo’s poor free cash flow conversion had three main causes: widespread collection delays, vendor terms that were shorter than the industry average, and late customer payments.
All this suggested that MediaCo could unlock much more of its cash from operations by collecting it faster and not paying it out as rapidly. Bain's consultants used the Net Working Capital Excellence tool to identify opportunities to unlock more than $800 million in cash benefits by implementing these changes.
The team then provided an even more specific proposal. They determined the specific causes for those collection delays and made a list of potential improvements. For payables, Bain helped MediaCo institute new practices for managing its supplier base. In all, the team analyzed, sized, and prioritized 17 opportunities to enhance MediaCo’s performance on cash conversion.
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How could MediaCo improve its cash conversion cycle?
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What working capital information should MediaCo measure and report on?
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What tools and governance should it put into place?
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Which stakeholders would need to be involved to implement the initiatives?
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What capabilities would help MediaCo own and continuously improve this process?
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How could Bain best set up the internal working capital team for success?
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How would Bain ensure these changes endured?
The approach
With the plan approved, Bain and MediaCo kicked off a months-long implementation. Bain consultants collaborated with representatives across the company to share insights and enact the roadmap for change. They provided feedback on each business unit’s existing working capital targets, designed the initiative implementation plans, supported and set up the governance for the program, and helped MediaCo’s various teams execute the initiatives, including launching pilots.
Concurrently, Bain’s capability experts and data scientists designed a new tracking and reporting system, supported by a user-friendly dashboard. This helped all MediaCo’s finance leaders monitor their performance on a shared basis. MediaCo then established a new project management office to rehearse the rollout strategy and launch the pilots.
Finally, the Bain teams advised on MediaCo’s new collections process to ensure the company could hit the CFO’s in-year working capital targets. With that, they enacted the pilots and the rest of the plan.
The results
In just the first eight months, MediaCo unlocked $300 million in working capital across six substreams, with the potential to double that figure. For the first time since its merger, MediaCo’s leadership now has a unified and accurate view of the current state of working capital across the enterprise and knows what actions they can take to improve free cash flow conversion. In under one year, MediaCo transformed how it manages working capital.
in cash unlocked in the first eight months
opportunities to enhance performance on cash conversion
