Private Equity Consulting
Creating value by optimizing procurement and supply chain management. We promote your growth and reduce costs with our many years of experience in private equity consulting.
Private equity investors have known for a long time that financial engineering alone is no longer enough to significantly increase the value of their portfolio companies. Growth and cost reduction, especially in procurement, are the effective levers for increasing value in the portfolio.
Value increasing approaches in procurement
Increase EBIT through extensive procurement cost reduction programs
- Performance improvement through integrated purchasing transformation
- Professionalization through further development of the procurement team
- Release of liquid funds through working capital optimization
- Increase of quality and supply security through strategic supplier partnerships
Depending on the industry sector, even savings of just 1% can mean a sharp rise in EBIT.
* Average industry output profitability is the major driver for EBIT increase, based on over 150 completed INVERTO projects.
Implementing value creation programs is time and resource consuming and cannot usually be done using in-house capabilities alone. For many years, we have provided support both to globally active British investors and to medium-sized investors that focus on Germany, Austria and Switzerland. We support them throughout the entire investment process, from due diligence to operational value creation and exit opportunities.
A brief overview of our services
We identify and assess potential savings in procurement and in the supply chain. However, our projects do not end with the development of a concept; we support the procurement organization until the actual implementation of the measures has been completed and the potential has been leveraged. Our success is ensured by comprehensive, up-to-date benchmark databases, sound methodological knowledge and more than 19 years of experience in procurement and supply chain management consulting.
Operational Due Diligence
In the context of operational due diligence, we evaluate synergies and savings potential that can be achieved with a potential takeover of an investment target. Through our many years of experience in evaluating procurement potential, we are able to demonstrate significant and achievable results very quickly.
Our operational due diligence process is based on four steps
1. Examining data and developing a product group structure based on actual vendor sales
2. Analyzing the procurement organization’s performance with the proven INVERTO performance benchmarking tool e-map and comparing with a relevant peer group
3. Evaluating procurement levers and benchmarking with the INVERTO database (over 4,500 initiatives and over 45,000 suppliers)
4. Developing a detailed implementation plan including run-up forecast for run-rate and EBIT savings
Portfolio Company Optimierung (Standalone)
An optimization project is divided into two phases: The potential analysis and then the implementation program. Experience has shown that thorough preparation of a potential analysis has proven its worth. Only in this way can the first effective results be achieved within a short period of time.
Potential analysis
- Evaluation of savings potential
- Benchmarking procurement organization
Implementation
- Implementation of quick-win initiatives with immediate impact
- Development of best-practice product group strategies
- Improvement of payment conditions and reduction of inventories and storage space
- Optimization of organizational structure and processes as well as FTE sizing for the procurement department
Cross Portfolio Optimierung (Portfolio Bundling)
The bundling of requirements across several portfolio companies generally offers great potential for savings. However, it also entails greater complexity. A PE-experienced project team is necessary to master the associated challenges. Always taking into account the interests of the companies and investors involved.
Procurement levers
- Exchange of best practice and benchmarks
- Stronger procurement synergies through standardization and bundling
- Increased bargaining power with suppliers
- Central coordination of similar requirements
Challenges
- Taking a wide range of stakeholders into account
- Increased complexity in the decision-making process with cross-border bundling+ Procurement organizations with different levels of professionalism
- Disparate system infrastructures and data transparency
Carve-out
Within the framework of carve-out deals, investors and purchasing decision-makers regularly face the following typical questions:
- How can the original effectiveness and efficiency of the procurement function be maintained in the initial phase after the spin-off?
- What must be done to build up a quick-witted procurement unit promptly after the spin-off?
- For what requirements and how long are TSA (Transition Service Agreements) required?
- For what requirements do new contracts have to be drawn up and negotiated with suppliers?
Post-Merger-Integration / Add-on Integration
The fusion of two portfolio companies as well as the Add-on Integration offer enormous potential for procurement optimization. Before the deal is closed, the consultancy team is a confidential partner to both companies, making it possible to carry out invaluable analyses without violating any applicable competition laws.
Pre Closing
Clean team analysis to evaluate confidential information (e.g. supplier structure, contractual terms, etc.) and creation of a tailor-made implementation plan
Post Closing
Immediate start of the implementation program and realization of P&L-effective savings on the basis of analyses carried out in advance
Our experience
We have been working with leading private equity investors for over 20 years. In total, our optimization programs have increased the value of our private equity clients’ investment portfolios by more than €1.2bn.
The results:
- Sustainable, measurable savings on the entire procurement volume, increasing your profits
- Determination of the value added by procurement and implementation of a state-of-the-art procurement organization
- Improved compliance grade and a sustainable basis for best practices in procurement
Do you want to optimize your working capital and significantly increase the value of your investment portfolio?
Our experts Thibault Pucken and Stefan Süßenguth are at your disposal for any questions concerning potential consulting and implementation in your investment portfolio. We look forward to hearing from you!
