Private Equity operations Consulting

Financial cushions and low interest rates create optimal conditions for investment. However, the high sales prices force private equities to maximise value creation in the company. In order to secure the margin, the procurement of portfolio companies must use all levers in the top and bottom line.

 

The private equity market booming

Private equity investors currently have a healthy cushion of dry powder. The fact that central bank interest rates will remain at a very low level in the longer term provides optimal conditions for investment. However, the high capital is also countered by increased sales prices. As a consequence, private equity companies must increase the value creation of their portfolio companies in order to achieve the most profitable exits possible.

In order to stabilise margins and defy the pandemic, private equity companies have therefore recently pulled out all the stops in the top and bottom lines. A closer look, however, reveals that not all potential for operational value enhancement has been exhausted. Procurement in particular still has a lot to offer in terms of cost optimisation.

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Private Equity Whitepaper

So far, private equity companies and their portfolio companies have come through the pandemic mostly unscathed. This is shown by our private equity study conducted in 2021. Although the vast majority of PE companies are recording declines in turnover in their portfolio companies, these are only having an impact in the form of falling profits for a good half of the participants. You can find out which measures you can use to cushion this in our white paper.

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Increase the value of your portfolio companies!

We support the value enhancement of your portfolio companies with many years of expertise and powerful procurement optimisation programmes. We accompany you throughout the entire process – from short-term measures during due diligence, to operational measures to increase value during the holding phase, to preparing the exit.

Especially portfolio companies that have been in private equity ownership for a long time usually already have a very professional procurement organisation and have already implemented the entire set of standard measures. We go one step further and use sophisticated methods and levers to find further potential in your portfolio companies. In addition, we support you in the digitalisation of processes and the implementation of compliance and sustainability strategies.

How do we operate in private equity consulting?

Within the framework of operational due diligence, we create transparency and evaluate synergies as well as potential savings that could be realised in the event of a takeover of the investment target. Thanks to our many years of experience and benchmarks from a wide range of industries, we can present you with a meaningful and realistic assessment of potential within a very short time. From this, we derive a detailed implementation plan for you, including a ramp-up forecast for the run rate and EBIT impact of the savings.

Cost optimisation:

After a detailed analysis of your direct and indirect requirements, we develop an action plan by identifying the optimal levers for each product group. As a rule, we start with categories in which we can realise so-called quick wins – rapid savings results that become immediately visible in the P&L. Using methods such as demand management and cost structure analyses, we put specifications to the test and uncover inefficiencies that lead to further savings.

Procurement transformation:

As part of the optimisation process, we also put the procurement organisation of your portfolio companies to the test. We support you in formulating procurement strategies, optimise procurement processes and further develop the organisation. This also includes the accompanying implementation of change management measures and training programmes.

Digitisation of procurement:

We help with digitalisation projects with our expertise in various industries – from the implementation of e-sourcing tools and the digitalisation of procurement processes to powerful data analyses and dashboards.

Working capital optimisation:

In order to secure the solvency of your portfolio companies and avoid unnecessary surpluses, we optimise payment flows and inventories and thus ensure an optimised working capital.

We help you identify and use synergies between several portfolio companies. Projects to standardise and bundle requirements usually offer great savings potential here. However, they also entail a high degree of complexity. Taking into account the interests of all companies and investors involved, our PE-experienced experts create transparency in the often heterogeneous systems and organisational structures and define the most effective levers.

Carve-Out:

In the context of carve-out deals, we support you in a smooth transition or in setting up a new, efficient procurement department. In doing so, we analyse existing structures and contracts and hold talks with existing suppliers in order to ensure and legally secure the supply directly after the carve-out.

Post Merger Integration (PMI)

The merger of two portfolio companies as well as add-on integration offer enormous optimisation potential in procurement. We support you before the closing by carrying out confidential analyses at both companies and drawing up a tailor-made implementation plan, naturally without violating applicable competition law. Post-closing, we support you in the implementation of the action plan, realise P&L-effective savings and help to establish a central and sustainable procurement organisation.

We set up a high-performance supplier management system for you. We use this to secure sustainable savings and support you in recognising and managing price and supply risks in good time. We also check your supply chain for compliance risks and help to ensure sustainability standards among suppliers.

 

Our private equity experts

Thibault Pucken

Managing Director

thibault.pucken@inverto.com Contact

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