For Private Equity businesses, procurement transformation can be one of the biggest drivers of EBIT and subsequent equity valuation improvement.
For most businesses, external costs can account for up to 70% of total costs. Every pound, dollar, or euro saved is a pound, dollar or euro improvement to profitability.
But, it’s not just cost reduction that is key. Better procurement drives significant softer benefits also. For private equity owned businesses, procurement excellence is competitive advantage and this is reflected in the valuation multiple.
There are three stages to make the impact.
1) Identify the savings potential and build an execution plan
Undertake a Spend Analysis & Opportunity Assessment to accurately identify where savings can be achieved, precisely how much can be saved and build an implementation plan to deliver.
2) Deliver a programme of procurement cost reduction
A managed programme of procurement cost reduction will be required; typically 6-8 months of procurement split into multiple category workstreams each going through a process of strategic sourcing. Quick wins will come out in 2-3 months and will usually ensure the project is self-funding.
3) Transform and build capability to ensure improvement is sustainable
Sustainability is vital. We ensure that when the consulting team leave the savings are not only sustainable but can be drive year-on-year.
The outcome: EBIT impact with multiplier effect on equity valuation.
Procura provide support to Private Equity businesses across all stages of their activity cycles:
- Pre-acquisition due-diligence to identify savings, synergies, risks and opportunities
- ‘Carve-Out’ analysis and planning to assess and guide capability, capacity, operational delivery allocation and planning
- Procurement “in-a-box” total managed service support
- First 100 days’ rapid procurement cost reduction
- Deep-dive strategic sourcing
- Cross-portfolio spend analysis
- Cross-portfolio procurement aggregation opportunity (GPOs)
Case studies and recent developments:
Why choose Procura?
- We are specialists in procurement. We bring Procurement Excellence, deliver cost reduction and improve our client’s profitability
- Our consultants work closely with all kinds of organisations to improve their profitability by identifying, delivering and maintaining savings from all categories of external spend
- A relentless focus on bottom-line results combined with our deep supply-market knowledge ensures that spend is optimised – and stays optimised
- We offer a range of entrepreneurial risk-sharing fee models to partner with our clients