Procurement Pitfalls
Real Deals
Problem: you’ve targeted a company as a possible acquisition, but it sits in the middle of a supply chain. What’s more, one of its main customers is teetering on the edge of insolvency and not paying its bills on time. As a result, your target is also in difficulty, even though its underlying business is sound.
And that’s not all. The non-paying customer is backed by a rival private equity house and it’s thinking that one of the ways to bring its portfolio company back from the brink would be to buy its main supplier – your target – and gain advantages from integration.
Welcome to private equity investing in the age of recession. Welcome also to a world in which procurement policies suddenly seem much more important in both deal-making and portfolio management than when the good times rolled.
To download the full article as appeared in Real Deals in May 2009 please click here...
