The second article in Alvarez & Marsal's (A&M's) three-part series on cost optimization, entitled “Not Every Dollar is a Good Dollar,” is written for investors and executives in private equity portfolio companies that have historically increased shareholder value through revenue growth, but are now facing challenges and lower levels of profitability. In A&M’s experience, portfolio companies in these situations cannot simply cut their way back to profitability, and while chasing incremental volume is a common response, that response could lead to a greater negative impact on profitability. Portfolio companies in these situations need to change how they operate, and that change often starts with the realization that Not Every Dollar is a Good Dollar.

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