Private equity has always been defined by its focus on value creation. For decades, the playbook has emphasized revenue acceleration, operational improvement, pricing optimization, and strategic clarity. While these levers remain essential, the dynamics of the market have changed. Inflationary pressure, supply chain unpredictability, regulatory complexity, and shifting customer expectations have reshaped what it takes to deliver consistent returns.
In this new environment, procurement is emerging as one of the most powerful and underutilized value creation levers available to private equity firms. Historically viewed as a function rooted in transactions and tactical execution, procurement is now positioned at the intersection of operational performance, cash management, and enterprise-level resilience. Its potential impact extends far beyond cost reduction. It influences EBITDA, working capital, risk exposure, and even the success of integration strategies within multi-entity portfolios.
For many firms, this represents a significant opportunity. The ability to elevate procurement maturity across portfolio companies, standardize strategic sourcing practices, and leverage enterprise-wide visibility is becoming a differentiator. Operating teams that embrace this shift are discovering that procurement can deliver measurable and repeatable value at scale.
The organizations that fail to leverage this lever risk leaving significant value uncaptured during both the hold period and at exit.
Why Procurement Has Been Overlooked in Private Equity Value Creation
Despite its impact potential, procurement has often been underprioritized. Several structural reasons explain this gap:
1. Value creation efforts have focused on front-of-house levers
Sales expansion, marketing optimization, and pricing management have traditionally dominated early value creation initiatives.
2. Procurement maturity varies widely across portfolio companies
Some businesses have structured procurement functions, while others rely on decentralized or informal purchasing processes. This maturity disparity makes portfolio-wide action challenging.
3. Fragmented data limits visibility
Without consolidated spend insights, operating teams cannot identify savings opportunities or leverage common suppliers.
4. Time-compressed PE timelines reduce strategic runway
With investment horizons shrinking, PE teams often prioritize initiatives with faster visibility and clearer outcomes.
5. Procurement was historically viewed as administrative
This perception has been slow to evolve, although market conditions have made procurement far more strategic than ever before.
These factors have contributed to an environment where procurement’s true potential has remained largely untapped. Yet this is precisely what makes it one of the most compelling opportunities for PE firms today.
The Strategic Shift: Procurement Is Now a Core Driver of Portfolio-Wide Value
Private equity firms are recognizing that procurement can deliver far greater impact than traditional cost savings. The most forward-looking operating teams are leveraging procurement as a strategic capability that unlocks enterprise value in several ways.
1. Strengthening EBITDA performance
Improved sourcing strategies, consolidated suppliers, harmonized pricing, and optimized contract terms can meaningfully expand margins. These improvements flow directly to EBITDA, creating value both during the hold period and at exit.
2. Enhancing working capital discipline
Payment terms, inventory strategies, and purchasing workflows all influence cash conversion and liquidity. Procurement can materially improve working capital outcomes when supported by the right insights and governance.
3. Reducing operational risk across volatile supply environments
Multi-entity portfolios often share suppliers without realizing the concentration risk. Procurement plays a critical role in risk detection, diversification, and resilience planning.
4. Creating cross-portfolio leverage
Consolidated buying power, shared supplier relationships, and unified contract strategies create economies of scale that individual companies cannot achieve independently.
5. Improving operational maturity across diverse entities
Procurement provides a unifying framework that stabilizes operations in organizations with varying levels of maturity. This creates consistency that benefits integration, scaling, and exit readiness.
These capabilities are not theoretical. They are measurable and operationally attainable with the right infrastructure and approach.
Why Portfolio-Level Optimization Requires More Than Savings Initiatives
It is not enough to launch isolated sourcing events or negotiate one-off savings. Private equity firms need a portfolio-wide foundation that turns procurement into a systematic, repeatable capability.
This foundation is built on three pillars.
1. Procurement maturity across portfolio companies
Procurement maturity is not uniform across a typical portfolio. Some companies have structured category management processes. Others rely on manual purchasing or decentralized decision making. Operating teams must elevate the baseline maturity across all entities to create the conditions for enterprise-level optimization.
This includes improving:
- Visibility into spend
- The quality and completeness of contracts
- Compliance with purchasing workflows
- Supplier performance management
- Strategic sourcing discipline
Solutions similar to Mulberri’s eGPO PRO represent how this maturity uplift can be operationalized at scale, though the concept itself applies regardless of platform choice.
2. Strategic sourcing powered by managed expertise
Many portfolio companies lack the resources to run disciplined sourcing events across all categories. Managed sourcing services provide the strategic lift required to accelerate opportunity capture.
These services help:
- Quantify savings potential
- Align sourcing goals with financial targets
- Run competitive events efficiently
- Standardize evaluation criteria
- Ensure rapid implementation
- Track realized value
With managed sourcing support, operating partners avoid relying on inconsistent execution across entities.
3. Value creation dashboards that provide clarity, transparency, and accountability
Value creation is difficult to measure without the right tools. Procurement optimization depends on knowing what has been committed, what has been delivered, which initiatives are progressing, and where value is getting stuck.
Portfolio dashboards enable:
- Cross-portfolio visibility
- Stage-based tracking of sourcing initiatives
- Supplier performance insights
- Contract visibility and renewal risk
- Savings realization monitoring
- Leadership alignment
With these insights, private equity firms can shift procurement from intuition-driven decisions to evidence-based strategy.
How Procurement Unlocks Repeatable Value Across the Portfolio
When procurement maturity, strategic sourcing discipline, and value creation transparency come together, the impact is transformative. Portfolio companies experience improvements individually, but the real advantage comes from the enterprise network effect.
1. Shared intelligence builds a stronger baseline
Visibility into common suppliers, category benchmarks, and pricing differences helps every company perform better.
2. Buying power increases exponentially
Cross-entity consolidation creates negotiation leverage and supplier engagement that no single entity could achieve.
3. Integration becomes faster and more predictable
New acquisitions can be onboarded into a structured procurement environment rapidly, improving early value capture.
4. Supplier ecosystems become more strategic
The enterprise can shift from transactional supplier relationships to high-performance partnerships.
5. The portfolio becomes more resilient
Risk becomes visible early. Supplier concentration is manageable. Contract renewals are controlled. Compliance strengthens.
6. Value creation becomes steady, measurable, and continuous
Procurement becomes a source of ongoing value rather than sporadic savings.
These structural advantages translate directly into higher returns and more robust exit narratives.
The Private Equity Firms Leading the Way Share One Common Trait
They treat procurement like a strategic operating discipline, not a supporting function.
- They invest in portfolio-wide visibility.
- They leverage managed sourcing to accelerate outcomes.
- They use dashboards to monitor progress with precision.
- They standardize key processes while preserving necessary flexibility.
- They recognize that procurement is a multiplier for enterprise value.
Platforms similar to Mulberri’s eGPO PRO exemplify the integrated model many leading firms are now embracing, where analytics, sourcing rigor, and transparent governance come together to drive value.
This trend is accelerating. The firms that adopt it early will have an advantage that compounds over time.
Procurement Is No Longer Optional in the Value Creation Playbook
The landscape for private equity is becoming more competitive. Faster investment cycles, rising financing costs, greater operational scrutiny, and more complex supply environments all place additional pressure on returns.
Procurement is one of the few levers that can deliver both immediate impact and long-term resilience. It strengthens EBITDA, improves cash, reduces risk, and aligns multi-entity operations. It supports integration, scaling, and exit readiness.
Most importantly, it reveals value that was always present yet difficult to access.
Private equity firms can no longer afford to overlook this lever. The opportunity cost is too high. The competitive landscape is too unforgiving. The enterprises that will outperform over the next decade will be those that recognize that procurement is not a back-office function. It is a strategic capability that shapes enterprise performance.
To explore how digital procurement can elevate value creation across your portfolio, you can request a conversation or a guided walkthrough of Mulberri’s eGPO and eGPO PRO capabilities.
