Rewriting the Playbook on Value Creation:
What Mid-Market Private Equity Firms Can Gain from Procurement Discipline

How can mid-market private equity (PE) firms rethink their approach to cost and operations in a time when budgets are tight, global economics are uncertain, and traditional methods are no longer sufficient? At this year’s iGlobal Value Creation Summit, I spoke alongside an insightful group of peers about the urgent need for new cost-saving strategies in this high-pressure environment.

The growing challenge for PE firms is to deliver results in shorter timeframes, with fewer clear pathways to secure value. Traditional strategies like workforce reductions and chasing top-line growth are still in use, but their limitations have become increasingly clear.

Without these options, PE firms must evaluate other ways to preserve value and efficiency. Indirect spending is an often overlooked and untapped area for achieving significant savings. These expenses — including IT, lighting, and facilities — typically account for 17 to 20 percent of a company’s revenue. However, indirect spending is often under-managed, especially in mid-market businesses where procurement functions are either decentralized, under-resourced, or viewed as an afterthought.

PE firms must look to new avenues to build sustainable, long-term success. Stronger procurement strategies are critical for businesses to remain financially resilient; this starts by introducing category-level discipline, competitive sourcing, and tighter contract management, rather than defaulting to age-old blanket cuts.

Procurement has evolved from a tactical function to a highly strategic driver of financial and operational performance. Cost initiatives must remain measurable and grounded, tied to impact on EBITDA over theoretical savings. CFOs must validate savings and hold teams accountable for delivering results reflected in profit and loss (P&L) reports, ensuring efforts are tied to measurable outcomes.

Mid-market firms are uniquely positioned to benefit from procurement as a strategic and intricate opportunity for business improvement. Procurement maturity often varies widely from one business to another, yet best practices can be scaled across a portfolio. For example, embedding procurement rigor into day one playbooks, 100-day plans, or value creation blueprints ensures execution isn’t left to chance.

Organizational transparency is critical to get cross-department leaders on the same page, yet most companies do not have a clear view into their spend, vendor contracts, or invoices. Sharing this information helps align company-wide goals, priorities, needs, and wants. The most successful mid-market sponsors centralize procurement at the firm level, which allows for economies of scale, consistency in execution, and better outcomes across the board.

Additionally, emerging technology can be a strong asset in supply chain decision-making. AI empowers teams to measure and forecast savings, sustainability, and identify future opportunities. Capabilities like real-time benchmarks equip procurement leaders with valuable data to help inform next steps.

This panel at the iGlobal Value Creation Summit brought a timely perspective for PE leaders to consider as businesses respond to shifting policies and complex economics. Indirect procurement is one of the most powerful and practical ways for PE firms to perform well in today’s environment. Ultimately, value creation comes down to strategic and consistent execution. Mid-market firms don’t need another presentation on potential; they need execution partners who will work alongside their teams, incorporate cost discipline, and deliver financial and operational improvements.

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