In April 2011 the BVCA, in association with Associated Procurement, conducted a survey of General Partners (GPs) and senior managers at investee companies to shed light on how private equity businesses conduct procurement, and what they think of their current arrangements. The results suggest that private equity and venture capital managers are relatively detached from procurement in their investee companies, other than as part of the overall business strategy or financial plan.
Instead, procurement is typically the responsibility of the portfolio companies themselves. This study finds that procurement practices are very important for those companies, and it is possible that small changes in procucrement practices could have a significant impact on company performance and profitability. In addition, there may be the potential for private equity managers to exploit the potential economies of scale across the full range of their investment portfolios, thereby lowering costs, increasing profitability, and boosting returns.
July 2011
Download: The verdict on procurement
