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The Value of a Group Purchasing Organization to Private Equity

Group Purchasing Organizations (GPOs) provide substantial benefits to private equity portfolio companies. GPOs leverage collective purchasing power to negotiate favorable contracts with suppliers, resulting in reliable products, consistent pricing, and advantageous terms. By joining a GPO, private equity portfolio companies gain access to a wide range of essential products quickly and efficiently.

GPOs also bring value to suppliers by connecting them with a large customer base, leading to increased sales volume and market share. Direct negotiations between GPOs and suppliers eliminate the need for time-consuming processes, such as Request for Proposals (RFPs), enabling faster cost savings for members and revenue generation for suppliers.

Beyond cost savings, GPOs offer market expertise, industry knowledge, and consultation talent to portfolio companies. They also streamline the procurement process, freeing up resources for core competencies. GPOs act as trusted consultants, providing guidance on best practices, market trends, and supplier selection. The benefits of GPOs extend beyond immediate savings, as they offer sustainable value and continue to support portfolio companies even after divestiture.

In conclusion, GPOs empower private equity portfolio companies by optimizing procurement, reducing costs, and increasing profits. They accelerate speed-to-savings, enhance supplier relationships, and provide valuable industry insights. GPOs are essential partners for private equity firms, offering significant value creation for their portfolio companies.

CoreTrust VP of Private Equity Sales Karin Manhardt recently published an article on our LinkedIn channel that dives deeper into the topic and provides additional proof points demonstrating the potential value that a GPO offers private equity firms. Read the full version of the article here.