Impact of Group-Buying Models on Small
Business Purchasing: Pilot Research Analysis

Abstract

This article examines the efficacy of group buying by presenting a brief synopsis of the group purchasing organization (GPO) market and by examining Vendor IQ Group, Inc., a new entrant to the GPO market for small- and medium-sized businesses managed by private equity firms. In particular, the article explores the tangible economic benefits gained by a specific member of Vendor IQ’s buying consortium. Herein referred to as “Company A,” this member is the undisclosed middle-market consultancy and portfolio company of a large global private equity firm. This report also examines the potential benefits that accrue to private equity firms that partner with GPOs to optimize their portfolio performance. The survey finds direct improvements in underlying enterprise values and thus implied value to limited partners.

TOPICS: Private equity, exchanges/markets/clearinghouses, portfolio construction, quantitative methods