How to improve Private Equity procurement in 5 steps

When private equity (PE) firms add a new business to their portfolio in today’s challenging climate, immediate value creation is more important than ever. High interest rates, geopolitical uncertainties, and volatile supply chains have made cost control and operational agility critical for delivering strong returns. In this environment, procurement is no longer a tactical afterthought; it is a strategic lever for driving rapid profit improvement and strengthening portfolio performance.

The case for procurement has never been stronger. With external spend now often exceeding a third of company revenues, targeted procurement initiatives offer the potential to deliver double-digit EBITDA growth, even as traditional levers such as revenue expansion remain under pressure. Leading PE firms are accelerating their focus on third-party cost optimisation, supply chain resilience, and supplier risk management to protect margins and sustain competitive advantage.

Recent years have seen suppliers pass on inflationary costs at a pace, often without fully reflecting subsequent reductions in input prices or technological advances. As inflation moderates in developed markets, the window for PE-owned businesses to recover lost ground and lock in sustainable procurement savings is now. Savvy leaders are challenging legacy supplier agreements, renegotiating contracts, and deploying advanced analytics to identify new savings opportunities and drive measurable results.

At a time when growth is harder to achieve and cost pressures are intensifying, a robust procurement strategy can deliver outsized impact. By prioritising procurement within the value creation plan from day one, PE firms are not only capturing quick wins but also building operational resilience and future-proofing their portfolio companies for whatever comes next.

Individual companies may require a slightly different approach, but fulfilling procurement potential is always a five-stage process.