Contract Fusion: Optimizing Vendor Relationships at a Merged Technology Company

Drawing on the deep industry expertise of its FTI Technology business, FTI Consulting helped a newly combined technology company save millions of dollars, solidifying operations as the companies integrated by maximizing value in its vendor contract portfolio.

Situation

A top-tier private equity fund acquired two businesses to form a new technology company worth billions of dollars. As the dust settled on the deal, it was clear that this new portfolio company needed help optimizing its combined vendor contract portfolio, which included similar contracts across both businesses. The FTI Technology Contract Solutions team was brought in to find synergies across the entire population of contracts and maximize value for the new entity.

Our Impact

FTI Technology Contract Solutions team worked with the client to enable them to make strategic decisions based on contract terms, allowing the company to maximize value across its contract portfolio.

The project saved millions of dollars by eliminating hundreds of contracts that lacked value for the newly formed company and enabling avoidance of payments for contracts under a transition services agreement.

FTI Technology’s experts also helped the company solidify contracts with operationally critical vendors, preventing gaps in coverage during contract expirations.

Our Role

The FTI Technology Contract Solutions experts reviewed agreements with 600 vendors, analyzing terms and projected spend data relating to them. The team also worked alongside finance and procurement stakeholders at the company to understand the course of performance with each supplier and the market dynamics for products and services. With this information, the FTI Technology team created “baseball cards” for each vendor, giving a clear picture of the realities of the commercial relationship, expected costs and value associated with each contract.

Additionally, the team provided recommendations for handling each contract to drive and optimize business value. Highlights included contracts suitable for termination, including instances of multiple contracts for the same product or service and contracts with particularly unfavorable terms for the business. The FTI Technology team flagged opportunities for contract consolidation (e.g., contracts across different products but with the same supplier) or renegotiations (e.g., contracts with ”most favored customer” provisions that could be used to reduce pricing based on benchmarks). Any key contracts that were approaching renewal were identified for extension to maintain operations without business disruption.