The Value Creation Lever That's Not on Your List

Your Portfolio Companies Negotiated Millions They'll Never Collect

The standard Value Creation Plan hits the same levers: pricing optimization, procurement savings, SG&A efficiency, and working capital improvement. These are well understood. But there's a gap between them, contract performance, where a significant portion of negotiated value often quietly disappears.

The Blind Spot

Contracts get negotiated hard. Rebates, volume discounts, SLA penalties, and payment terms are all carefully structured, signed, and filed. But then the contract is filed, and the connection to execution is lost. Finance pays the invoices, and procurement moves to the next deal. As a result, nobody reconciles what was agreed against what's actually happening. The contract value was won, but it was never realised.

What the Numbers Show 

This is actual, not theoretical, leakage, as our examples show. A global beverage manufacturer discovered €3M in unclaimed rebates. Volume thresholds had been met for years, but the money was never collected. A public rail network identified £17M in annual SLA penalties that were contractually owed but never enforced against subcontractors. A biotech company recovered $4.6M across three categories: payment term optimisation ($4M), eliminating unnecessary early-payment discounts ($120K), and claiming service credits ($475K). None of this required renegotiation as the terms were already in place.

Why This Keeps Happening

Contracts are treated as static legal documents rather than operational instruments. One PE Operating Partner put it bluntly: "We add stuff to the contract to make us feel better and safer, but we don't really know whether it will. The more we put in, the less chance we have to manage it." The result is over-engineered agreements with no mechanism to track performance against them. Portfolio companies lack the structured data to determine whether rebates are being claimed, whether pricing matches the contracted terms, or whether payment terms are being honoured.

What's Changed

Historically, surfacing this value required months of manual work or expensive system implementations—neither of which was compatible with PE hold periods or resource constraints. That's no longer the case. Contract intelligence can now be deployed in weeks, connecting agreement terms to invoice and payment data, and continuously flagging deviations. Outcome-based pricing means the work pays for itself from recovered value. 

For Operating Partners looking to the next wave of margin improvement, Contract Performance Management offers the fastest route to EBITDA without requiring behavioral change or transformation programs. The value is already negotiated. It just needs collecting.

To learn more, explore our private equity value creation page.