12% EBITDA growth for a Manufacturing PE PortCo achieved in 3 months
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PROBLEM
A Private Equity company was looking for rapid value creation initiatives for its recently acquired carve-out entity. The company had a decentralized sourcing and procurement team, focused on tactical procurement. The PE firm believed there was no value in strategic sourcing because the buying power of the PortCo had been significantly reduced after the carve out, but they were open to new ideas on sourcing and procurement.
SOLUTION APPROACH
We quickly identified Strategic Sourcing of Direct Materials as an opportunity area based on the age of the existing contracts, the market trends in the sourced commodity feedstocks, and the supplier competitor analysis.
We conducted a 12-week sourcing process of the top 3 commodities, including RFPs and one-on-one negotiations for incumbents and challengers. We ensured new pricing was based on feedstock pricing indices in order to drive price transparency and spend forecast accuracy.
RESULTS
We reduced costs of all 3 key commodities, increasing EBITDA by 12% annually.
The PE company leveraged our results to refinance the company within a year of original purchase at 1.5X original purchase price.