The situation
Deal IQ negotiated 25 contracts across seven of the sponsor's portfolio companies, from a $24M platform proposal down to routine renewals.
Portfolio companies are not uniform. They buy different things, they have different teams, and they arrive at a renewal with different information.
In some cases a sponsor holds frame agreements with particular vendors, which set consistent terms across the portfolio and often a uniform discount.
Deal IQ treats that as a starting point rather than a floor. A frame agreement is not the best available price, and portfolio companies should not rely on it as though it were. There are almost always savings to be negotiated on top, and that accounted for a large part of this result.
What we found
Deal IQ's mandate covered 25 contracts across seven companies, and the savings came from both ends of it: a $24M ServiceNow proposal that produced the single largest result, and a long run of mid-sized renewals where the work was less visible but the percentages were often higher.
Working across a portfolio also changes what each company brings to the table. A vendor negotiating with one portfolio company is handling one account. A vendor negotiating with a sponsor's advisor, across several of its companies, is handling a relationship it has to think about more carefully.
The result
- Negotiations
- 25
- Portfolio companies
- 7
- Largest single saving
- $12.5M, ServiceNow
- Total savings
- $29.4M
25 contracts across seven portfolio companies.
Takeaways
- Savings at both ends: a $24M platform proposal and a run of mid-sized renewals
- 25 contracts across seven portfolio companies
- The sponsor relationship changes what a vendor will consider on any one deal
Frequently asked questions
How does a portfolio-wide program differ from individual negotiations?
It makes it even easier for a portfolio company to engage. The sponsor already has terms in place, so a company with a contract in front of it can send it straight to Deal IQ.
Do portfolio companies have to participate?
No. These programs run deal by deal. Each company decides which negotiations to bring in.
Does this work for smaller portfolio companies?
Yes. This program covered contracts from the low six figures upward, and smaller companies often have the most to gain.
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