Private equities are constantly on the look-out for new approaches that will quickly achieve efficient value creation. The potential of bottom-line measures such as procurement optimization are still far from being exhausted. Our White Paper shows you how you can tap into value creation potential through procurement optimization.
The private equity market is becoming increasingly tough. The high level of dry powder in the market and the high level of competition between investment companies have come up against a supply with limited profitability. Many businesses, however, have already been passed along and the potential for value creation is increasingly being exhausted. The chance of conditions improving is seen as slim. Due to high entry prices, private equities need more and more time to achieve their high target returns.
Optimization measures from the top line have become insufficient in producing the required value increases – especially in the short term. The fact that the bottom line has untapped potential is nothing new. Many levers, from reducing procurement costs to optimizing working capital, are already in use today. Yet, the potential of measures that are easily implemented is becoming ever smaller. Those with a real desire to succeed must resort to more sophisticated levers and measures in the current climate.
To get an idea of the situation in the private equity market, INVERTO carried out a study of “procurement optimization as a value creation lever in portfolio companies” and surveyed around 60 executives in private equity companies.
Key questions asked in the INVERTO study:
- What fundamental levers and, in particular, procurement levers are being used to increase the value of portfolio companies sustainably and what
effects are investors generating?
- Is there still potential in the selection and implementation of value enhancement measures?
- To what extent are operational value creation approaches carried out through external experts?
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