Expense Takeout Strategies for Portfolios

Alliance Cost Containment (ACC) partners with middle-market PE firms to assist their portfolio companies in driving out excess indirect procurement costs. Our targeted strategies improve EBITDA and increase valuations by reducing overhead and promoting operational efficiency. Once new pricing is implemented, we perform monthly audits on each spend area, creating full transparency of the value created. To date we have performed 3000+ category audits and saved millions of dollars for PE sponsored investments.

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For Every Phase of the Deal

Due Diligence Support

Pre-Acquisition Cost Analysis

 

  • High-confidence savings estimates for platform investments & add-ons
  • Gives competitive bidding advantages
  • Identify supplier risks

Indirect Cost Reduction

Average of 7% – 35% Savings

 

  • Complimentary, custom savings analysis
  • Cost reduction in 35+ expense areas
  • Ongoing audits ensure improved EBITDA & valuations

Monthly Savings Audits

Verifies and Measures Progress

 

  • Tracks realized cost savings for bottom line impact
  • Audits line-item spending at the SKU level
  • Monitors for errors & compliance

PE Portfolio Profile

ACC works with middle-market PE firms who sponsor companies in a broad range of verticals.

Most portfolio companies with whom we show outstanding cost improvements have revenues of $50M or higher with an annual indirect / non-core procurement budget of $10M – $500M+. Sponsors and portfolio companies who work with ACC to reduce expenses can expect a cost savings range of $1M – $20M+ per portfolio company.

Group expense reduction for PE firms

Enterprise Value Gain Per Portfolio Company

at 10x multiple

$
0
to
$
0

Performance-Based Fee Model

With an ACC private equity engagement, if there are no savings, there are no fees. 

We have perfected the process of reducing indirect operating expenses. Our Louisville, KY based team expertly analyzes data, combines spend and manage a bidding process that reduces operating costs in a matter of weeks. If we don’t find and implement savings in any of the procurement areas we review, we don’t get paid. 

Our goal is to deliver the lowest market price, superior contracts and inherent process improvements to all major verticals including manufacturing, healthcare, retail, distribution warehouses and financial firms.

What Sets Us Apart

We look beyond the numbers at vendor quality, value and service. Our team finds, implements and tracks meaningful savings with world-class providers.

  • In-depth market knowledge for each savings category
  • National purchasing agreements with blue-chip suppliers
  • Procurement data collection at the line-item level
  • Subject matter experts devoted to each project level
  • Aggregates purchasing volume
  • Tailored, white-glove savings programs
  • Ongoing discovery of billing errors & non-compliance
  • Monthly audits for accuracy
  • Flexible, performance-based fee structure
  • No membership fees

Could your PE portfolio benefit from an expense reduction strategy?

Private Equity Group Purchasing Cost Reduction

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    Boosting EBITDA and portfolio valuations through savings and efficiencies

    Benchmarking & Tracking

    Our ability to benchmark and document savings is just one thing that sets us apart from GPOs and others in the private equity expense reduction space. Working efficiently with our U.S. based team, portfolio companies achieve a reduction in their non-core procurement expenses with minimal disruption to company operations.

    Our vendor agnostic team reviews current purchasing activity at the line-item level before negotiating with current and new suppliers to achieve the lowest market rates, typically delivering savings of 7%–35% per category reviewed. Once savings are established, we assist with implementation across the expense areas to ensure the updated pricing is realized. After implementation, most categories are monitored with a detailed audit process which compares original pricing with the new, lower pricing.

    Group Savings for PE firms

    Complimentary, custom savings analysis for each investment identifies savings opportunity.

    Significant savings on 30+ non-core expense areas agreed upon in advance by each company.

    Monthly audit reports validate the exact amount of implemented savings that flow to the bottom line.

    Zero risk – performance-based fee structure with minimal disruption to your PE firm or company operations

    Advice for Implementing Expense Reduction Across a PE Portfolio

    Avoid misaligned vendor incentives

    While some PE firms utilize Group Purchasing Organizations (GPOs) to generate value, many are paid commissions by vendors, which creates incentives for portfolios to pay higher prices over time.

    When not properly disclosed and documented, these hidden GPO commissions lead to conflicts of interest and increased liabilities for PE firms. ACC is happy to conduct a confidential, risk-free audit of your current GPO provider to see if you are receiving full disclosure and optimal savings for the savings areas engaged.

    Create Competitive Tension for Fair Market Pricing

    Lack of competitive tension in the marketplace is an important pitfall for portfolio companies to avoid, and something we often encounter. Most companies have at least a handful of long-standing, protected vendor relationships. While there are merits to having close vendor ties, these relationships create a complacency that causes companies to miss out of significant savings as well as high-value offerings from non-incumbent suppliers.

    ACC’s cost reduction services for Private Equity Firms ensures PE sponsored companies achieve the lowest prices with the best quality services.

    Lower non-core expenses for PE portfolios across 35+ procurement areas

    Increases overall portfolio valuations

     EBITDA improvements through savings and efficiencies

    Improves procurement processes
    and best practices

    Performance based model. No savings, no fees (and no risk)

    Send us a message

     

    Contact us to learn more about private equity procurement improvement with ACC.
    Our team will be in touch with you shortly.

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      Contact ACC

       

      The Private Equity Team at ACC is looking forward to hearing from you.

      Emmeline Wexer
      ‭201-657-0043
      ewexer@alliancecost.com


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      *DISCLAIMER: Figures on this page and website are for example purposes only. Savings will vary based on the size of the firm and spend. Use of the Alliance Cost Containment website does not constitute a professional relationship. Neither ACC nor its affiliates makes any express or implied representation or warranty about, or shall be liable, in contract, including negligence or otherwise, for any direct, indirect, special or consequential loss, damages or reliance in connection with this site, its use, its content or any products or services referred to on this site.