4C Associates Acquires Procurement Consulting Firm ProfitFlo

Hot on the heels of the announcement of a new CEO from January 1st to "create the leading cost and procurement solutions provider", our sponsor 4C Associates announces a new merger to help them do just that. London-based 4Cs is a procurement, cost and supply chain solutions provider working closely with global and national organisations to drive cost reduction and performance improvement through Consultancy, Technology and Managed Service Solutions. Its acquisition of ProfitFlo brings it the strength of a specialist procurement business that focuses on delivering innovative procurement solutions.

ProfitFlo is known for providing profitability and cash flow improvements, process re-engineering to improve visibility and control of costs and a CEO/COO perspective of financial/cost management, and performs data analysis and project execution.  The parties have not released details of the acquisition price, or of ProfitFlo's revenues, but we suspect they are something in the low seven figures annually; not huge, but with a good blue-chip client base and a surprisingly international reach.

In a recent press release, the new CEO of 4C, Simon Terry, said “I am delighted to welcome ProfitFlo to 4C Associates. ProfitFlo’s track record in delivering client value and their deep expertise in workforce management strengthens our position as the leading specialist procurement services firm.”

But we like to get a bit deeper than press releases, and we were fortunate to secure an interview with two of the people driving this strategic decision, Terry himself and Mike Lander, a Founder and Director of ProfitFlo. Both came across as genuinely excited about the development and the opportunities it could afford both parties; it was very clear they are both sincerely passionate, and energetic, about how the organisations will work together.

We asked Mike a bit more about ProfitFlo in terms of its size, geographic reach and capabilities in order to get a picture of how it fits with 4C. Mike told us that typically its global clients are upper to middle-market companies -- those with about £200 to £300 million turnover, but also including private equity investment firms. ProfitFlo will have two to three consultants working on a project at any one time, but these are large complex projects with a duration of anything from three to nine months to up to three years. It has been expanding business services into the HR domain, and this is where it becomes really interesting for 4Cs.

But the benefits of this union run both ways. For ProfitFlo: “We are a successful company working traditionally with CFOs to improve their bottom line profit -- what we lacked was breadth of capability; clients with the bigger agendas don’t naturally come to us. So 4Cs were attractive to us because of their breadth of expertise and history, and this gives our customers more confidence to work with us,” explained Mike.

“One area that particularly attracted us to 4C is how they’ve built up their savings methodologies. We have spent a lot of time on that, aligning and investigating with the Board around delivery of true savings – which is what 4C have achieved, clearly identifying savings, able to communicate it and get real value from it. They are able to manage that opportunity and make it actually end up on the bottom line.”

And ProfitFlo brings some interesting IP with it into the equation: it has done a lot of unique work within contract labour and recruitment, both contingent and permanent, involving as much as 20,000 to 30,000 contractors in either direct spend or agency. This generates complex sets of data that are difficult to manage or track. Its Rate Card Analysis tool was developed to make sense of what’s happening with a 30,000 contract labour force. It provides an intuitive visual of the data, improving quality of delivery. Extracted data can be analysed to give meaningful and useful information with engenders better decision making.

“Its ease of use means it can be employed as much by senior-level execs to help make business decisions as by category managers. There are very few companies that can provide this depth of insight,” said Mike. “It is a tailored solution that provides all the information at your fingertips. Its integration into 4C will help especially those large-scale clients that have a lot of agencies, where rates might be all over the place and contracts buried deep. It provides more control, for example over those situations where people come in without going through a procurement organisation, where spend is not easily measured.’

And for 4C: “We focus on proving value to the Board, historically we have great experience in category and functional knowledge and expertise, bringing value to section directors, like heads of manufacturing and services,  but we needed to strengthen our ability to talk to the HR director. Helping us to expand new business services into the HR domain, ProfitFlo will be vital to improving our HR development agenda. It will bring deep knowledge of all the aspects that affect this workforce, enabling us to talk to all board members about delivering value – the strategic goal of the CFO – rounding out that capability for us,” said Simon.

On the integration itself, Simon told us that is going well: “Two key senior people, Steve Harrison and Mike, are coming across to take roles in our management team. They will be involved in how we deliver our strategy; we have seen strong growth and forecast further growth next year and beyond, so they will be helping us make important decisions going forward. They both bring real depth of experience and procurement capability in a broad range of sectors.”

In terms of fit, Simon was very animated about how well the two companies complement each other: “We are currently working on some great opportunities and we can already identify where ProfitFlo have skills which perfectly fit with our own skills and with our clients. We are looking forward to welcoming across the team into 4Cs. Opportunities already exist and we can go to our clients with a much broader proposition: we have some larger clients that are already very excited about this.”

The cultural fit is obviously strong, and it makes 4Cs’ capability much greater than it was before. Simon explained how many of 4Cs’ experts have come from a ‘Big 4’ company background. What they like about 4C Associates is that they can bring their ideas and strengths into something without the big-enterprise structure but with big-enterprise abilities, where agility and innovation are applied. “We are probably now the largest UK-based strategic procurement consultancy, with like-minded people, all here for the same reason, with a professional services background but with entrepreneurial spirit.”

When we asked Simon what next, he simply replied: “We’ve got a lot planned for 4C Associates, a great set of capabilities to offer organisations, with specialisation in all functional areas to speak to Board members. This is just another step along our journey -- and there’s more to come ...”

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