In the private equity (PE) space, it’s no surprise that successful investments often depend on the ability to pinpoint opportunity and identify risks early in the due diligence process and during the first critical 100 days. We’ve all heard the tales of post-closing integrations gone bad – supply disruptions, employee turnover, customer attrition, and unwieldy, multi-pronged value creation efforts that overwhelm and delay results. 

Procurement should be a no-regrets value creation lever, but common mistakes can create complexity and delay results. In this article, I’ll share my perspective based on what Adair & Company has seen while advising and consulting with PE firms – the top five watchouts from a procurement and supply chain perspective, from due diligence through the first 100 days.

One of the most common mistakes we’ve seen Operating Partners and Deal Teams make in due diligence is undercutting deal and integration efforts by not applying enough rigor in due diligence. Even when given access to data, how many times has your team baked a generic 2-5% first-year COGS savings into the deal model? And how many times have you left project identification for integration, and how has that impacted 100-day results? To avoid this pitfall, we recommend the following:

1. Do the Work, Don’t Wait. For most midmarket companies, it should take days (not weeks) to size savings and risks in due diligence. Help Deal Teams price-to-win with accurate cost synergies, avoid costly surprises, and move with speed into the first 100 days. If prioritized, Procurement can be one of the quickest cash-generating levers in your arsenal.
2. Be More Specific. Stop using generic 2-5% savings (on COGS) in your deal models. Increase the accuracy of your cost synergies by utilizing third-party benchmarks that are recent and specific to the categories your Target company buys. It’s marginally more effort for substantially more clarity and benefit.
3. Detail Projects. Sprint from the deal model to 100-day integration by translating savings targets into concrete savings projects. Frontload price harmonization, supplier negotiations, GPO leverage, and Indirects Sourcing – then layer in more complex Direct Material categories as wins start to accumulate.