Spend Analysis in Private Equity: Driving EBITDA in the First 100 Days

Written by Anna Pilipiuk, Head of Growth, Strategy & Product and Keri-Ann Passmore, Marketing Specialist

So, you’ve completed the due diligence work followed by an acquisition. Congratulations, the deal is done. Now comes the difficult part.

The portfolio company is acquired, the value creation plan has been agreed, and expectations are immediately high. Within weeks of acquisition, Operating Partners are expected to identify opportunities, launch initiatives and demonstrate measurable progress against EBITDA targets. The pressure to create value starts on day one.

Fortunately, most portfolio companies already contain one of the largest value creation opportunities available. Between 30–60% of a typical company’s cost base is external spend, and, depending on the business, 50–70% of that spend is addressable through procurement. In other words, procurement is Private Equity’s best friend and has the ability to influence a significant proportion of the cost base, making it one of the fastest and most controllable levers for improving EBITDA.

The opportunity itself isn’t the challenge. The challenge is knowing where to start.

When you’ve inherited thousands of suppliers, millions of transactions, multiple business units and years of purchasing history, identifying the initiatives that will deliver the greatest impact isn’t straightforward. Which categories should be prioritised? Which suppliers should be renegotiated first? Where is spend fragmented? Where are duplicate suppliers, inconsistent pricing or opportunities to consolidate purchasing? More importantly, which initiatives will deliver value within the first 100 days, and which should become part of the longer-term transformation programme?

Without accurate spend visibility, answering these questions becomes almost impossible. Procurement teams often rely on fragmented ERP data, inconsistent supplier records and incomplete category structures, meaning opportunities are identified through experience and intuition rather than evidence. Valuable time is spent searching for opportunities instead of delivering them.

This is precisely why spend analysis should be the first procurement activity undertaken after acquisition.

It is not simply a reporting exercise or a dashboard. It creates a single, reliable view of the external cost base, allowing Operating Partners to understand exactly where money is being spent, quantify the size of each opportunity and prioritise initiatives based on potential EBITDA impact, speed of delivery and implementation effort. Rather than launching disconnected cost reduction projects, spend analysis provides the foundation for a structured, evidence-based value creation roadmap.

Ultimately, procurement can only improve what it can see. Before supplier negotiations begin, before sourcing programmes are launched and before savings targets are assigned, organisations first need confidence in their data. Because in private equity, faster decisions backed by accurate spend intelligence translate directly into faster value creation.

Why Spend Analysis Should Come Before Every Procurement Initiative

If procurement is expected to become one of the primary value creation levers within a portfolio company, the obvious question is where to start.

The answer is rarely supplier negotiations, and it isn’t running competitive tenders, consolidating suppliers or renegotiating contracts either; those activities certainly create value, but only once organisations understand where the opportunities actually exist.

Every procurement initiative, regardless of its objective, starts by answering the same set of questions: what are we buying, who are we buying it from, how much are we spending, and is that spend concentrated or fragmented? Are different business units paying different prices for the same products or services, which categories offer the greatest savings potential, and which suppliers represent strategic relationships rather than simply adding unnecessary complexity?

For many portfolio companies these questions appear straightforward, yet in reality they are surprisingly difficult to answer.

Most organisations have years of purchasing history sitting inside one or more ERP systems, but that data has often evolved organically over many years: suppliers have been created under different names, acquisitions have introduced additional systems, business units categorise spend differently, and procurement processes have developed independently across different parts of the organisation.

As a result, the data exists but the insight does not, and spend analysis is what bridges that gap.

Rather than simply reporting historical transactions, it creates a structured view of the external cost base, transforming millions of individual transactions into actionable intelligence, and allows Operating Partners to move beyond assumptions and anecdotal evidence to prioritise initiatives based on objective financial opportunity. Spend analysis provides exactly that prioritisation.

What Happens When You Don’t Have Accurate Spend Data?

One of the biggest misconceptions surrounding procurement is that poor data simply creates reporting challenges. In reality, poor spend data slows value creation and significantly increases execution risk. Every procurement decision, from prioritising categories and identifying suppliers to estimating savings and launching sourcing events, is only as good as the data it is built upon.

Client Case Study: Private Equity

We worked with a private equity client to review its recruitment category and identify savings opportunities. The first step was to request the spend data, but what came back told us almost nothing about what had actually been purchased, in which currency, or at what rates. Duplicate supplier records made it impossible to identify the true strategic suppliers, while inconsistent descriptions meant we couldn’t establish purchasing volumes or understand demand patterns with confidence.

Without that visibility, we couldn’t accurately quantify the opportunity or build a credible sourcing strategy. The project only moved forward after working closely with stakeholders to reconcile contracts, invoices and purchasing records manually. Even then, parts of the spend had to be extrapolated because complete records simply didn’t exist. What should have been a straightforward category review became weeks of data validation before procurement activity could even begin.

This illustrates a challenge that many organisations underestimate. Poor spend data doesn’t just delay analysis, it compromises every stage that follows. Going to market with incomplete or inaccurate spend information is often a recipe for failure. Suppliers are asked to price opportunities based on incorrect volumes or an incomplete understanding of demand, incumbent suppliers may be overlooked because they have not been correctly identified within the data, and the organisation risks receiving bids that bear little resemblance to its actual purchasing requirements.

The consequences are significant. Procurement teams may secure contracts based on inaccurate assumptions, only to discover during implementation that the scope, volumes or supplier landscape are materially different from what was tendered. At best, this results in lengthy clarification exercises and delayed implementation. At worst, organisations are forced to rerun the sourcing exercise entirely, renegotiate newly awarded contracts or accept commercial terms that fail to deliver the expected savings. In a private equity environment, where every month of delay postpones EBITDA improvement, those mistakes are both costly and avoidable.

This is precisely why high-quality spend data should never be viewed as an administrative exercise. It is the foundation upon which every procurement decision is built. Investing time in establishing an accurate, trusted view of spend before launching sourcing activities reduces execution risk, accelerates implementation and gives organisations confidence that the opportunities they are pursuing are both genuine and achievable.

Turning Spend Data into a Prioritised Value Creation Roadmap

One of the biggest advantages of spend analysis is not that it identifies opportunities, but that it identifies the ones with the greatest impact, the best margins and the easiest implementation, and builds a wave programme around them accordingly.

Following an acquisition, portfolio companies are rarely short of improvement ideas; the real challenge is deciding where to focus first, whether that means renegotiating logistics contracts before professional services, establishing whether indirect spend is more fragmented than direct materials, checking whether supplier prices are inconsistent across business units, weighing supplier consolidation against category sourcing, or working out which initiatives can realistically be delivered within the first hundred days versus which belong in the longer-term transformation programme.

Without data, these decisions become subjective. Spend analysis allows procurement leaders to rank opportunities based on expected financial benefit, implementation complexity, available internal resources and speed of delivery, so that instead of launching multiple disconnected initiatives simultaneously, organisations can build a structured roadmap that balances quick wins with longer-term strategic programmes.

This is particularly valuable within private equity, where every initiative competes for management attention and implementation capacity, and rather than attempting to improve everything at once, Operating Partners gain a clear understanding of which initiatives will generate the greatest return on effort.

That level of prioritisation is often the difference between procurement delivering incremental savings and procurement becoming a genuine value creation function.

There is also a timing dimension to this that is easy to underestimate. The sooner spend data is accurate and categorised, the sooner sourcing and savings initiatives can actually begin, and in a private equity context every week spent cleaning data is a week not spent capturing value.

This is precisely why many portfolio companies turn to automated spend analysis tools rather than working through the data manually: an automated solution can categorise and validate spend in a faster, more accurate way rather than the weeks or months a manual review would take, freeing procurement teams to focus on sourcing and negotiation instead of data cleansing and closing the gap between acquisition and the first pound of realised savings.

Why Spend Analysis Shouldn’t Stop After the First 100 Days

Many organisations treat spend analysis as a one-off exercise carried out immediately after acquisition, which is understandable given the pressure of the first hundred days. That period is naturally focused on rapid assessment, quick wins and building the foundations of the broader value creation plan.

The difficulty is that holding periods are getting longer, and what used to be a tidy hundred-day programme is increasingly turning into a multi-year effort.

Treating spend analysis as something done once at the start assumes the business stands still after that point, when in practice suppliers renegotiate their pricing, priorities shift, new suppliers come on board, bolt-on acquisitions add complexity and business units change how they buy.

Once that happens, the visibility procurement worked hard to build in those early months starts to fade, and along with it the savings that were supposedly locked in. Contracts can be renegotiated and savings identified in month one, but without ongoing tracking of compliance and realisation, there is little to stop that value slipping away before it ever reaches the P&L.

More mature portfolio companies take a very different approach. Rather than viewing spend analysis as a diagnostic exercise, they embed it as a core business capability that supports decision-making throughout the investment lifecycle.

At any point in time, management can understand where money is being spent, how purchasing behaviour is changing, where new opportunities are emerging and whether procurement initiatives are continuing to deliver the expected financial return. Instead of repeatedly asking the same questions every time a new sourcing project begins, procurement teams work from a continuously updated and trusted view of the external cost base.

This level of visibility creates value far beyond individual procurement initiatives. Every sourcing event, supplier negotiation, budget review, cost transformation programme or acquisition of a bolt-on business starts with the same question: what are we spending today? Organisations that can answer that question accurately and immediately make faster decisions, prioritise investment more effectively and execute procurement programmes with significantly greater confidence. In that sense, spend analysis is not another procurement activity; it is the foundation that enables every procurement activity that follows.

Perhaps more importantly, from a private equity perspective, it also increases organisational maturity. Businesses that maintain accurate, structured, and continuously governed spend data are less dependent on individual knowledge, have stronger financial controls, and can demonstrate a disciplined approach to managing third-party expenditure. Procurement becomes embedded within the way the business operates rather than being a series of isolated cost reduction exercises.

That maturity becomes particularly valuable towards the end of the investment cycle. Prospective buyers want confidence that EBITDA improvements are sustainable rather than one-off interventions. Being able to demonstrate where spend is going, how procurement decisions are made, how savings have been measured and sustained, and how governance has evolved gives far greater credibility to the value creation story. In other words, continuous spend analysis doesn’t simply help create value during ownership, it helps demonstrate and support that value when the business is ultimately brought back to market.

Conclusion: Spend Analysis Is the Starting Point for Procurement-Led Value Creation

Private equity firms are under constant pressure to convert value creation plan into measurable EBITDA improvements as quickly as possible. Procurement offers one of the largest operational value creation levers available, but only when organisations know where to focus their efforts.

The sooner a portfolio company develops a complete and accurate understanding of its external spend, the sooner it can identify sourcing opportunities, prioritise initiatives based on value and implementation effort, and move from analysis to execution. Every week spent trying to understand fragmented data is another week where implementation is delayed, sourcing projects are postponed and savings remain unrealised rather than flowing through to the bottom line.

Speed, however, should never come at the expense of accuracy. Anyone who has built a spend cube manually will recognise the challenge. The process is rarely linear. As procurement teams or consultants work through supplier by supplier and category by category, new information continually emerges that changes the picture. Suppliers initially assigned to one category turn out to span several others, duplicate records are uncovered, purchasing patterns become clearer and previously hidden relationships begin to emerge. This often leads to repeated recategorisation and refinement of the analysis as understanding improves. While this iterative approach is a natural part of manual spend analysis, it also introduces the risk of inconsistent outputs, delays in decision-making and, ultimately, prioritising the wrong categories or initiatives simply because the full picture has not yet been established.

Without confidence that the underlying spend data is complete, consistent and accurately categorised, organisations risk building their procurement strategy on incomplete evidence rather than genuine opportunity.

For private equity firms, the objective is therefore not simply to perform spend analysis faster, but to establish a repeatable process that delivers accurate spend intelligence quickly and consistently. Whether through automated spend analytics platforms, standardised data management or embedded governance processes, organisations that reduce the time between acquiring data and identifying actionable opportunities gain a significant competitive advantage. They accelerate value creation during the first 100 days while simultaneously building a long-term procurement capability that continues to identify opportunities, support better decision-making and strengthen the organisation throughout the investment lifecycle.

Ultimately, spend analysis is not the end goal, it is the catalyst that enables procurement-led value creation. The faster organisations can generate trusted spend intelligence, the faster they can turn opportunities into sourcing initiatives, sourcing initiatives into realised savings, and realised savings into sustainable EBITDA improvement.