Executive Summary
In the high-stakes environment of Private Equity (PE) roll-ups, the good enough mindset is a silent killer of EBITDA. When firms choose to leave disparate legacy systems in place to avoid upfront capital expenditure, they inadvertently subscribe to a legacy tax, a compounding cost of manual labor, data silos, and operational risk. This blog deconstructs the fallacy of the good enough tech stack, exploring how technical debt limits scalability, obscures financial truth, and ultimately erodes the exit multiple. We argue that a unified NetSuite platform is not a luxury, but a fundamental requirement for any firm seeking to achieve true alpha through acquisition.
I. The High Cost of the Status Quo
“It’s not broken, so why fix it?”
This is the refrain of the conservative Operating Partner. When a platform company acquires a small bolt-on, the immediate instinct is to focus on sales, headcount, and low-hanging fruit synergies. The legacy software, whether it’s a 1990s-era Sage instance or a custom-built founder tool, is often labeled good enough for the time being.
However, in the context of a 3-to-5-year hold period, good enough is a high-interest loan against your future growth. Every day an entity remains on an isolated legacy system, the complexity of your portfolio grows exponentially. By the time you reach the fourth or fifth acquisition, the status quo has become a mess that prevents the very scale you set out to achieve.
II. The Legacy Tax: How Fragmented Tech Erodes Margins
When you manage a portfolio through good enough tech, you are shifting the cost from software to headcount and risk.
1. The Excel Shadow Economy
The most visible symptom of good enough tech is the explosion of spreadsheets. When entities are on different systems, the Finance department becomes a data-entry factory. Highly paid analysts spend 60% of their time manually exporting, cleaning, and consolidating data in Excel to produce a single monthly report.
• The Cost: You are paying for strategic minds but using them as manual labor.
• The Risk: A single broken cell in a consolidation spreadsheet can lead to a million-dollar error in your EBITDA reporting.
2. The Visibility Gap
Good enough tech provides a rear-view mirror, not a windshield. If it takes 20 days to close the books because of system fragmentation, you are managing the business based on what happened three weeks ago. In a volatile market, this delay is fatal. Real-time visibility, the ability to see a drop in margin at Subsidiary X this afternoon, is only possible on a unified platform like NetSuite.
III. The Scalability Wall: Why QuickBooks Fails at 5x
Many bolt-ons are acquired while running entry-level software like QuickBooks or Xero. While these are excellent tools for a $5M business, they hit a scalability wall when integrated into a $100M+ platform.
1. The Audit Nightmare
During an exit, the buyer’s auditors will perform a deep dive into your books. If your data is spread across five different QuickBooks files and three legacy ERPs, the audit will be longer, more expensive, and more likely to uncover unreconciled differences. This leads to price chipping, where the buyer reduces their offer because they lack confidence in the data integrity.
2. The Human Middleware Constraint
To scale a roll-up on good enough tech, you have to hire more people for every acquisition. If each new entity requires a new local controller and a new AP clerk because the systems don’t talk to each other, you have no operating leverage. A unified NetSuite environment allows you to centralize back-office functions, meaning you can double your revenue without doubling your finance headcount.
IV. Technical Debt and the Exit Multiple
In 2026, the buyer profile for PE exits has shifted. Strategic buyers and larger PE funds are buying for infrastructure as well as EBITDA.
The Technical Due Diligence (TDD)
Sophisticated buyers now conduct technical due diligence. If they find a patchwork of legacy systems, they see a post-close liability. They know they will have to spend $2M and 12 months implementing a new ERP.
• The Valuation Hit: Buyers will often deduct the cost of a future ERP implementation, plus a hassle premium from your enterprise value.
• The Clean Multiple: A company running on a single, standardized instance of NetSuite OneWorld signals to the market that the business is professionalized and ready for the next $500M of growth.
V. Shifting the Mindset: From Cost Center to Value Driver
To defeat the good enough enemy, PE firms must view ERP implementation as a value creation lever rather than an expense.
The ROI of Modernization
By moving all bolt-ons onto a core NetSuite platform, you realize immediate value:
• Procurement Power: Aggregate spend across all entities is visible in one place, allowing you to renegotiate vendor contracts.
• Cash Velocity: Automated dunning and centralized collections in NetSuite reduce DSO (Days Sales Outstanding), freeing up working capital for the next acquisition.
• Speed to Close: Automated intercompany eliminations and consolidations reduce the monthly close from 15 days to 3 days.
VI. Don’t Let Good Enough Kill Your Alpha
The difference between a top-quartile PE firm and the rest of the pack is often found in the boring details of operational infrastructure. Good enough tech is a trap that leads to stagnation, hidden risks, and diminished returns.
By investing in a scalable, unified digital foundation like NetSuite early in the hold period, you ensure that your roll-up strategy is limited only by your ability to find deals, not by your ability to process them. In the world of Private Equity, your tech stack is either an accelerant or an anchor. Choose wisely.
Is Your Portfolio Suffering from the Legacy Tax?
Trajectory helps PE firms audit their current tech debt and build a roadmap for professionalization. We move you from good enough to best-in-class.
