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Generating Greater ROI for Private Equity Firms

Business conditions for private equity (PE) firms are quite different from those of “pre-Lehman,” with reduced availability of funds, more stringent borrowing terms and equity requirements, and challenging restructuring of term loans coming due. Thus, it is critical for PE holdings to take steps to not only conduct deeper due diligence on acquisition targets’ operations to gain a realistic picture of the targets’ present state and potential, but also to identify and enact changes in existing portfolio companies’ supply chains that dramatically improve these organizations’ financial performance.

Supply Chain Edge can help on both fronts. We bring deep operational expertise and a proven assessment process to the due diligence investigation of a target acquisition. SCE quickly mobilizes to conduct an in-depth review of a target acquisition’s key operations, inventory, and financial information—often in as little as six weeks.

We also can leverage our knowledge and experience to help a PE firm identify and implement ways to improve supply chain performance—either in an acquisition target or existing portfolio companies. For instance, recently a $100 million manufacturer found it could generate annual increases in productivity of between 5 percent and 6 percent by taking a number of key actions recommended by SCE. SCE is also leading the implementation initiatives to drive these gains.

Whether you’re in need of a more robust due diligence review of operations or a boost in performance of your portfolio holdings, Supply Chain Edge can help PE firms reduce the risk of, and generate greater return on, their investments in today’s challenging business and financial climate.

Situations where Supply Chain Edge can add value to your portfolio investments:

  • Improve ROIC, ROA, and cash flow

  • Master operating plan calls for cost reductions

  • Margin protection/deterioration

  • Customer service issues (fill rates, order fulfillment, lead times, loss of market share)

  • Entry into International business or different customer segments

  • Changes in “go to market and distribution strategy” (channels of distribution, customer order patterns, order size, demographics, expectations, e-commerce)

  • Expecting or experiencing rapid growth (organically or through acquisition)

  • Examining outsourcing feasibility

  • Total landed costs not identified

  • Lack of meaningful and relevant metrics

  • Best-in-class and benchmarking assessment need for cost and process comparisons

  • Alignment disconnects with customers and suppliers

  • Competitive landscape tightening

  • Inability to effectively get product to distribution channels

  • Inefficient inventory turns and lack of inventory visibility