Even in normal times, private equity sponsors pay ruthless attention to cost structures of portfolio companies. Covid has raised to new levels the challenges buyers have managing supply chains. 

“Eighteen months ago, Covid was a top-line issue; now it’s mostly a cost issue,” one partner told us. “We can pass price increases along, but with  90-days notice. That’s too long to wait.”

Another source agreed. “We’ve been playing catch-up all year,” he said. “Revenues are fine, but costs are out of whack. And here we are a year later – we thought this would be fixed by now!”...