Title

Maximising value creation through procurement: A checklist for Private Equity

Section
Checklist
Summary

Written by Simon Whatson and Andrea Zanaboni

Private Equity firms increasingly recognise procurement’s potential to deliver near-term EBITDA improvement – yet many fall short of realising its full value. This framework sets out critical actions and focus areas across the deal cycle for PE firms to maximise value creation through procurement.

Organisations typically underinvest in procurement, creating limited capability, fragmented processes, and poor visibility. Often seen as the less glamorous sibling of revenue, procurement nonetheless has a direct, visible impact on the bottom line and carries less risk than initiatives like organisational restructuring or entering new markets. In one Top 20 global PE firm, Procurement delivered over $240m of realised EBITDA improvements – roughly $2bn of equity value at standard PE multiples (8-10x) – and surfaced an additional $220m of opportunities. In short, overlooking or underestimating procurement is to miss the opportunity for substantial value creation.

PE firms should apply a focused procurement lens in due diligence and early ownership to establish annual plans, build savings pipelines, and prepare for exit. The following checklist outlines the key focus areas and actions for applying this lens throughout the deal cycle.
 

1. Due diligence / pre-deal

Objective: Identify procurement's performance, control, and value creation potential to inform deal valuation and investment opportunities.

Procurement opportunity benchmark

Assess procurement effectiveness through defined metrics that measure control, compliance and alignment with business priorities. Consider factors including the below; target ranges are provided as a guide, but actual figures will depend on elements such as industry, company size, and maturity.

  • Percentage of total spend managed by the purchasing department (typical target: >80%).  
  • Percentage of spend covered by purchase orders compliant with policy and procurement strategy (typical target: >90%).
  • Percentage of spend routed through formal tenders in the last three years.
  • Ratio between suppliers under contract and sourcing personnel (typical target: <50%).
  • Degree to which tools, policies, and processes are formalised and consistently applied.
  • Alignment of procurement priorities with overarching business objectives (e.g. cost reduction, working capital optimisation).


Supplier landscape review (high-level)

  • Who are the top suppliers by value and criticality?
  • Are there material single-source risks or concentration exposures?
  • Are there any immediate consolidation or negotiation levers? 


Team and capability snapshot 

  • What is the size, structure, and skill level of the procurement team? 
  • What is the footprint, cost, and ROI of the procurement function relative to spend managed and value delivered?
  • Are incentives and performance objectives aligned with Procurement and the Business’s strategic priorities (e.g. cost, cash, ESG, risk)? 

2. Planning phase 

Objective: Define the baseline, addressable opportunity, and roadmap for value capture.

Baseline and analysis

  • Has a clean, recent spend cube been developed?
  • What portion of spend is addressable?
  • Are there inefficiencies such as tail spend, maverick buying, or fragmented sourcing?


Contract management and leverage

  • How much visibility is there into contract status (active, expired, or missing)?
  • Are there benchmarking or re-bidding opportunities?
  • Do SLAs and KPIs exist and align with performance?


Portfolio synergies  

  • Are there common spend categories across portfolio companies that represent synergy potential?
  • Can buying power be pooled to achieve better terms?
  • Are there opportunities to centralise select procurement activities or establish shared services?

3. Execution phase

Objective: Deliver rapid savings, implement structural improvements, and formalise controls.

Value creation roadmap

  • Focus on launching quick-win initiatives within the first 100 days to achieve tangible impact. 
  • Implement contract lifecycle management and supplier segmentation.
  • Strengthen PO compliance and overall process discipline.
  • Identify additional structural or digital investments required to facilitate long-term performance.


Team and capability enhancement

  • Upskill team to enable category ownership and stakeholder engagement.
  • Where necessary, deploy external or interim procurement expertise to accelerate results and embed best practices.
  • Implement digital procurement tools (e.g. spend analytics, e-sourcing, CLM) to improve visibility, efficiency, and data-driven decision making.

4. Steady-state phase 

Objective: Institutionalise the procurement operating model and embed value creation into the P&L and governance.

Continuous value tracking 

  • Validate procurement savings against the P&L and ensure they are embedded in the Value Creation Plan (VCP) assumptions and performance tracking.
  • Embed procurement KPIs into business scorecards and performance reviews.
  • Formalise procurement policies, tools, and governance structures.
  • Align the procurement function’s ongoing priorities with business objectives such as cost, cash, ESG, or risk.

Unlocking procurement’s full potential

A structured, phased approach to procurement assessment and transformation – from due diligence through to execution and steady-state – ensures that value creation is both quantifiable and sustainable. By combining rigorous metrics, operational insights, and organisational enablers such as capability, governance, and incentives, PE firms can transform Procurement from a transactional function into a strategic lever that drives measurable improvements across EBITDA, business resilience, and long-term competitiveness. This not only results in higher valuations but also frees up cash for reinvestment, strengthening supplier relationships and making the businesses more enduring and scalable.