The Private Equity (PE) industry is an active owner of businesses and will often shine the spotlight on procurement, which typically represents from 30-60% or more of external spend.
Since procurement savings and efficiencies notoriously pass directly and in full to the bottom line, this is a natural and profitable focus for PE owners.
Stakeholders and management under PE are aligned in their strategic objectives, which means that EBITDA improvements from procurement are easier to deliver than under many other ownership structures.
Efficio supports PE deal, operating and management teams looking to size, implement and sustain the savings they believe to exist.
Our core strengths are that we:
- Analyse the facts and the data
- Listen to both client strategies and supply base concerns
- Set target profit improvement ranges that we know are achievable or surpassable – we tie our remuneration to that achievement
- Partner with our clients to implement improvements and build a ‘best of breed’ Procurement operation that can become self-sustaining and self-improving
- Deliver real savings, fast and strong ROI, and a substantial equity value uplift
How Efficio works with PE clients
Efficio is typically brought in at Due Diligence stage to identify where improvements can be made and to help develop the investment thesis, even before an acquisition is made.
Leading players recognise that early cost savings have a significant impact on EBITDA, leading to long-term value. Bringing in expert help at due diligence stage and then making a detailed, diagnostic assessment of potential savings that can be generated up to two months ahead of ownership means that improvements can be made from day one, freeing up capital for investment in growth or producing immediate profit increases.
The next step is an Opportunity Assessment, where we would expect to find a readily achievable saving of 5-10% per addressable category. Our specialist team will then partner with you to implement these savings.
Private Equity seeks to create the best performing businesses with leading management teams. Higher levels of EBITDA are generated from best of breed Procurement functions that deliver optimal performance from efficient spend while retaining the existing team.
We often work with mid-market companies owned by Private Equity groups that are facing a shortage of talent – partnering with clients, training and upskilling existing personnel, and providing additional resource at times of need such as major contract renewal.
Efficio builds support around your specific needs, depending on the capabilities of the business and the group, and the scale of the Procurement Transformation programme required. This can be a small team for a few specific sector categories, a large team covering all areas of spend, or even interim support if your internal resources are limited or stretched.
We can also provide longer term Managed Procurement Service and a technology platform to ensure savings are sustained and tracked. Our bespoke technology platform, eFlow, will identify and monitor category spends across your portfolio – no matter how extensive – revealing opportunities for standardisation and consolidation.
Every business can always improve certain areas of spend by 5-10%. This is a big value creation lever that stakeholders and management aligned through PE ownership, together with Efficio can work in partnership to deliver.
Efficio has already worked with more than 30 significant PE groups, and completed more than 60 portfolio company assignments – almost half of our PE clients have used us on multiple occasions. Our experienced consultants and associates are drawn from over 40 nationalities, so we can meet your needs at a local, national, regional or global basis.
We work with clients across a range of scenarios, including:
- At the time of acquisition, as part of the 100-day plan
- After a change of management
- When spend is growing more rapidly than expected
- As part of an annual assessment of spend
Since our inception, Efficio has sourced over €55 billion of direct, indirect, Capex and working capital categories for PE clients, optimising EBITDA, D&A and cashflow to meet client strategies. Our experience covers everything from corporate carve-outs to management buy-outs, and from profitable mergers to ‘fire sale’ rescues.
Efficio works with leading Private Equity houses like KKR, Bain Capital, Advent International, Montagu, BC Partners and CVC, amongst many others to deliver savings to their portfolio companies.