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Doughty Hanson scoops operational procurement PE award

Efficio is proud to announce Doughty Hanson’s Quirón deal as the winner of the inaugural Operational Excellence in Procurement Award.

This award, which was presented yesterday by Declan Feeney to Jon Higginson from Doughty Hanson at Private Equity International’s Operating Partners Forum in London, gives companies the opportunity to showcase which company in the portfolio has best addressed procurement issues and turned them into a value creation lever.

Managing spend, which is directly under a company’s control, is a key route to value creation with substantial EBITDA improvement potential and getting it right can be difficult given the need to get buy-in within the organization, particularly across functions and the need to change or adapt supplier relationships. This award highlights and rewards the work done by internal operating teams.

The Quirón deal

In April 2012, Doughty Hanson acquired USP Hospitales, followed by an acquisition and merger of Quirón in July 2012, and a subsequent acquisition of Teknon in September 2013. Focusing on cost synergies from the merger, Doughty Hanson’s procurement team worked closely with the deal team, management and advisors to pull together a synergy model which was critical to the success of the deal. Over the following nine months, every category of spend was addressed, combining negotiating power to drive the best deals possible and create value.

The Quirón deal is a great example of the value that can be created from improvements in a company’s procurement function, particularly with the backdrop of a difficult macro environment in Spain. The Doughty Hanson team and company management worked well to deliver a strong result over a short time period as the company was exited successfully within two years of purchase.

Declan Feeney, Private Equity Director, Efficio

Value creation

The synergy model and savings identified were a key component of value creation. Complete organizational focus on delivering the synergy plan was a key factor in the success of the deal. With approximately €22.5 million savings achieved and almost €250 million of value created, Quirón was sold to IDC Salud in July 2014 for a 2x money multiple, of which 65% of the value created came from the procurement savings.