Most Private Equity Firms Underestimate the Number of Vendors they Work With

Through long-term relationships in the private equity industry, we've seen a lot of scenarios where firms don't realize the number of vendors they're working with.

Reason is that in Private Equity, there is a lot of focus on the operations of portfolio companies. In turn, the operations of the management company are often left to a team that is lean. Although qualified in their niche, a lean operating team can't possibly have expertise or oversight into every vendor the firm works with.

This often happens because the deal team wants what they want to help make better decisions. Without a dedicated internal source, CFO's often find new names when they request vendor lists from FP&A.

Not only does this contribute to cost over-runs, it also can mean non-compliance with your existing vendors, and gives an increased cyber risk when the IT team is unaware of new tools being used.

To resolve this, having a dedicated team that is unconflicted towards managing these suppliers for the management company. Doing so though without adding additional headcount and creating the opportunity for cost reductions as a result of the expert oversight in niche categories of vendor management.

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