How a PE sponsor unlocked $1.8M in annualized technology savings and built a roadmap to exit — in the first 12 months post-close.
Key Outcomes
The sponsor had acquired the company with a clear value creation thesis, but technology had not been a focus area in the pre-LOI due diligence. Post-close, the operating partner's first look at the IT environment revealed what they described as "ten years of organic growth with no one in charge."
The company had accumulated software tools, carrier contracts, and vendor relationships across three prior ownership periods — many of them overlapping, several of them redundant, and almost none of them competitively priced. Annual technology spend was nearly $4M, but no single person in the organization had a complete picture of what was being paid, to whom, and for what.
The sponsor's investment thesis included a target EBITDA multiple improvement that required meaningful cost reduction across the operating structure. Technology was identified as one of three areas where rapid improvement was achievable.
ARG deployed a 100-day technology assessment structured around four workstreams: spend discovery, vendor rationalization, contract negotiation, and roadmap development.
The spend discovery phase produced, for the first time, a complete inventory of every technology contract, subscription, and vendor relationship — along with the business owner, renewal date, and current market benchmark for each.
Vendor rationalization identified 22 contracts that could be consolidated, renegotiated, or eliminated entirely without any functional impact on operations. ARG led the negotiation process for each, using market pricing data and competitive alternatives to drive favorable outcomes.
The 3-year technology roadmap was built in direct collaboration with the sponsor's operating partner, structured around the investment timeline and EBITDA targets in the original investment committee memo.
Complete inventory of all technology spend across the organization. Every contract, subscription, and vendor relationship catalogued with business owner, renewal date, current cost, and market benchmark.
Identified 22 contracts for consolidation, renegotiation, or elimination. Led negotiation process for each, achieving a combined $1.8M in annualized savings. Zero functional capabilities eliminated.
Built a 3-year technology roadmap aligned to the sponsor's value creation thesis and exit timeline. Prioritized investments by EBITDA impact and risk reduction. Presented to the full investment committee.
Retained by the sponsor for ongoing vendor management across the portfolio company — providing a single accountability point for technology decisions and contract renewals through the hold period.
The $1.8M in annualized technology cost reductions was achieved within 90 days of engagement start — ahead of the sponsor's target timeline and at a higher dollar figure than the pre-engagement estimate.
The 22 vendor contracts consolidated or eliminated represented a meaningful simplification of the IT operating environment. The management team went from managing dozens of vendor relationships to a rationalized stack with clear ownership and renewal visibility.
The technology roadmap became a standing agenda item in the operating committee's quarterly reviews. When the company was taken through a secondary process 24 months post-close, the technology roadmap and the IT cost reduction were presented as evidence of operational maturity — and received specific positive commentary from the acquirer's due diligence team.
“We've done this with three portfolio companies now. The pattern is always the same — technology spend that nobody has looked at critically in years, and a significant amount of money sitting on the table. ARG finds it, negotiates it, and builds us a roadmap we can take into the board room.”