4 Ways Supply Chain Finance Helps Private Equity Owned Companies Overcome Buyout Challenges

Supply Chain Finance Helps Private Equity

By PrimeRevenue • Published April 30, 2019 • 3 minute read

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.

  1. 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?”
  2. 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.
  3. 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.
  4. 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.

4 Ways Supply Chain Finance Helps Private Equity Owned Companies Overcome Buyout Challenges