Operating performance improvement and EBITDA enhancement to maximize return on investment
Private equity firms’ success depends on how successful their portfolio companies are. All deals have the same objective, to sell a company for a higher multiple than the initial investment. What happens between the initial investment and the exit is where PE does all the action to nurture value from companies — by refining strategy, enhancing operational performance, building leadership team and delivering profitable growth to support growth in valuation.
Valorant works with PE firms and their portfolio companies to enhance operating performance and EBITDA by achieving Supply Chain and Procurement excellence. By generating short-term savings as well as creating sustainable long-term value, Supply Chain and Procurement has proved to be an effective contributor to Return on Investment (ROI) improvements of PE investments.
At Valorant, we believe true value can be unlocked with a more inclusive view of the portfolio. In addition to optimizing supply chain and procurement operations at portfolio level, a consolidated view must also be accounted to be able to harness the value potential and achieve desired returns within the planned holding period. However, this can be inherently complex as portfolio companies often operate in different industries and geographies, due to which some of these challenges may arise:
Lack of visibility into spend as
Inability to effectively leverage aggregate spend
Lack of collaboration
Resistance from suppliers
“Valorant’s specialized PE Portfolio Operating Performance Improvement
services can help you efficiently navigate these challenges to boost ROI and enhance
valuations at the “PE pace”. We understand the complexity of portfolio-wide spend aggregation and other unique challenges faced by the industry. Our experience enables us to design tailored Procurement strategies suited to your portfolio companies and management structure to help you get closer to your target ROI faster. Our services delivered in a comprehensive and agile approach ensures that our clients maximize savings and enhance valuations in an expedited timeline.
Here is an overview of our
Portfolio Operating Performance Improvement services:
The first step towards unlocking Procurement benefits is to get comprehensive visibility of the spend. Typically, the quality of spend data at portfolio companies is below par, is spread across multiple systems and is unsatisfactorily categorized. A spend analysis program can help harmonize categories and taxonomies across portfolio companies and allow the management to get a holistic view of the aggregate spend. Subsequently this data can be used to derive actionable business insights, uncover hidden savings opportunities and direct the overall Procurement strategy for the PE firm.
Portfolio-wide Spend Aggregation and Formulation of Procurement Strategy:
Valorant works closely with the leadership of all portfolio companies to identify spend areas which can be sourced collectively. Typically, Indirect categories such as Travel, Office Supplies, IT Telecom, Insurance, General Professional Services, Fleet etc. can often be easily aggregated. The aggregated spend can then be sourced by implementing the most suitable strategies including
Suppliers can sometimes be reluctant to work in a cross-portfolio environment due to
concerns around ownership stakes and the extent of the PE firm’s influence on company
management. Valorant is experienced in drafting and negotiating equitable terms in the
contract to assure fair deal for suppliers even as the PE firm continues to add new
investments to the portfolio as well as make exits.
Opportunity Assessment and Procurement Excellence for Portfolio companies:
Our team of consultants are experienced in applying strategic Procurement principles to companies of all sizes. We work with individual portfolio companies to identify savings opportunities through spend analysis, contract analysis and stakeholder interviews. We understand that time is critical for all PE investments and follow an expedited approach for opportunity identification and execution. After a quick opportunity assessment, our team launches a rapid sourcing program wherein high value contracts are renegotiated and spend is consolidated to key suppliers to achieve quick bottom-line savings. Additionally, to capture incremental value, market bidding (RFP) and demand management projects for pertinent categories are launched simultaneously to get competitive rates, optimize consumption and gain additional leverage on incumbent suppliers. A $400MM PE-owned insurance company achieved 7% savings on their third party spend in just 6 months with Valorant.
Supply Chain and Operations:
We work with your operating partner and leaders at various portfolio companies to re-engineer core business processes, rationalize manufacturing and support operations and optimize the supply chain. We will leverage our industry expertise and deep knowledge of supply chain best practices in the areas of network optimization, lean manufacturing, logistics, inventory management and more
With years of experience, Valorant helps PE firms simplify Supply Chain and Procurement operations with a structured approach. Our focus on both company specific and cross portfolio strategies to help your PE firm boost EBITDA and enhance valuations and achieve the desired returns on your investments.
Interested in learning more about how Valorant’s PE performance improvement services can
help your firm maximize ROI and optimize investment period? Reach out to us now