02 January 2023
Topics in this article
  • Private Equity

Procurement improvement is a low-risk, high-ROI area of focus for PE-backed companies seeking to maximize shareholder returns. At Proxima, we have a proven track record in supporting Private Equity to deliver greater commercial benefits at pace both internally and across investments.

Supplier costs can account for up to 70% of the average company’s revenue. They are the most significant cost line and one of the most likely sources of innovation, growth, and accelerated investor returns.

Cost transformation can be addressed quickly and at any stage in the investment cycle, creating rapid and sustainable value. This will result in increased cash flow and improved EBITDA, which will have a material impact on investment returns by contributing to a higher exit value and reducing debt. By partnering with various PE firms, we have:

  • Embedded an execution-oriented team to deliver accelerated value: completed 35 accelerated sourcing/savings projects in 7 months across IT, Marketing, Ops/FM. This delivered $11.2m in total annualized savings and $22m of EBITDA value.
  • Contracted by PE parent to focus on portfolio company in the restaurant industry. Increasing control to drive further investment: reviewed $51.4m of indirect spend, including 106 suppliers that identified and delivered $3.95m in annualized savings. We also implemented a number of initiatives to mitigate supply chain risk.
  • Contracted by PE parent to focus on portfolio company in the healthcare sector industry. Delivering accelerated savings: worked across all categories to deliver $11.2m of bottom-line savings in our first 12 months. Leveraged spend to lead a standardization program and aligned procurement to ownership objectives.
  • Contracted by PE parent to focus on portfolio company in the office services sector. Fix and return managed service: Proxima took on procurement operations from offshore and the IT category (c. $1bn). We provided a managed service and transformation, handing back a high-quality service to the parent.
  • Contracted by PE parent to focus on portfolio company in the food sector. Building Center-Led Procurement across the US and Europe: constructed and ran a center-led hybrid model, conducted a rapid savings assessment, and built pipelines. This drove supplier costs down by $29m in year one and a 30% reduction in supply base.

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