How leading PE sponsors leverage working capital to fund strategic initiatives

Amid an increasingly volatile macroeconomic and geopolitical landscape, private equity (PE) firms face several challenges across the deal lifecycle—from fundraising to deal execution and exits. The Federal Reserve's reduction in interest rates provides some relief, yet high costs continue to pressure PE returns. Despite a 50% increase in Q3 2024 exit values, total exits have reduced, and the median holding period for portfolio companies has increased.

Read How leading PE sponsors leverage working capital to fund strategic initiatives to learn how other organizations have increased their company value through prioritizing cash flow optimization.

Key learnings to adopt:

• Accelerating Receivables: Improve Order-to-Cash processes to reduce liquidity risk and bad debt exposure.

• Decelerating Payables: Optimize Procure-to-Pay processes to improve Accounts Payable balances.

• Inventory Management: Enhance liquidity by managing inventory effectively without compromising customer demand.

• Leveraging Technology: Use data-driven tools and AI to drive better forecasting and cash performance.

Unlock the full potential of your portfolio companies' working capital. to learn how KPMG can help your PE management teams achieve superior cash flow and financial performance.