CASE STUDY SS-FB-DD-02 | Due Diligence

Private Equity Acquisition of a Bakery

Navigating Data Limitations for Strategic Insights in an Operational Due Diligence Study

Food and Beverage | Due Diligence

18 Months

Post-close value realization

Nationwide

Big box retail expansion

Low Data

Still High-confidence diligence outcome

Challenge

Conducting a Comprehensive Assessment Despite Limited Data

Due Diligence Scope: A prominent private equity firm aims to acquire an east coast bakery, requiring a rapid operational due diligence study. Operational Assessment: Delta Driver LLC must assess the bakery’s potential and operational risks, focusing on key areas such as safety, quality, leadership, equipment, and planning.

Review Areas: The assessment includes reviewing expansion plans, major customer contracts, raw material supply, and infrastructure. Opportunity Identification: Opportunities to increase capacity and reduce costs need to be identified. Data Limitations: The company’s limited data availability (accounts receivable/payable) and minimal production and labor data make the analysis complex yet crucial for a SWOT evaluation.

Solution

Applying Expertise and BI Tools to Unlock Insights

Expert Site Visit: Delta Driver LLC visited the plant, bringing its bakery expertise to gain insights into due diligence requirements. Data Analysis: Available ERP files were transformed using a BI tool to identify business trends, using complex DAX expressions for detailed data slicing. Comparable Data: Retrieved data from past Delta Driver projects, such as wastewater treatment projects, provided cost and risk estimates for the buyer.

Substantiated Reporting: Adequate insights led to a comprehensive report, highlighting areas of improvement and leadership engagement. Key Findings: Emphasized the need for better HR, marketing, maintenance, LEAN principles, safety protocols, production scheduling, and wastewater pre-treatment solutions.

Results

Enabling a Strategic and Confident Acquisition

Informed Decision-Making: The Private Equity Firm confidently pursued the acquisition, leveraging the report's insights to quantify and manage risks effectively. Strategic Purchase: The firm acquired the bakery at a favorable multiplier, balancing return on investment with assessed risks. Timely Acquisition: The deal closed and 18 months later was realized by the PE Firm, reflecting a well-planned and executed transaction process.

Nationwide Presence: The bakery now maintains a strong foothold in major big box stores across the country. Success Story: The journey from challenges to solutions culminated in sustainable growth and ongoing success for both the Private Equity Firm and the bakery.

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