As the volume of private-equity-backed buyouts surges, so does the pressure for newly purchased companies to become high performers post-buyout. To understand these pressures is to understand the current (and complex) challenges facing private equity groups.
For a newly acquired company, the mandate is clear. PE groups need a faster path to positive returns — and companies need to be able to respond. Newly acquired companies have always been under pressure to improve financial performance – but the pressure is mounting in the current post-buyout environment.
In this white paper, you’ll read about 4 ways supply chain finance helps private-equity owned companies generate more cash, quicker without taking on additional debt. The following four examples are ways supply chain finance helps companies respond to this pressure.
- Paying down debt: PE groups are demanding positive returns quickly and debt reduction is a critical part of that journey. It’s no longer a question of “should we deleverage?” but “how can we deleverage quickly and most effectively?”
- Accelerate strategic initiatives: By accelerating cash flow, companies can unlock working capital previously trapped within their supply chains and invest this capital in strategic initiatives.
- Meet value creation targets despite current economic conditions: Regardless of business climate, supply chain finance provides companies a financing alternative that reduces interest expense, generates cash and improves debt-to-EBITDA ratios.
- Diversify funding mix: Supply chain finance is one more to add to the mix with the added benefit of offering a lower cost of funds than a revolving line of credit and a more material impact to cash flow than dynamic discounting or traditional early payment programs.