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Capex adjustments of +105% allowing the Private Equity firm to properly size its investment

EFESO Consulting was selected to support a US-based Private Equity firm and one of its portfolio companies to conduct a thorough operational performance review and associated due diligence of a potential acquisition target industrial bakery company based in Portugal.

The target company ran a significant local operation of 500 employees spread over two factories, located in Portugal. The target company generated global sales in excess of €70 M in the past year, with most products sold under private label and for co-manufacturing customers.

The focus was on assessing the performance of maintenance activities and reviewing the company three-year investment plan.

Our approach

During this three-week project involving an international team, we conducted:

  • A preliminary extensive analysis of the target company’s investment plan, with a particular focus on variances between planned and actual historic investments, a ‘deep dive’ on selected investment projects, and a cost-benefit analysis
  • Expert on-site visits at target company premises. We ran a qualitative assessment of overall operations and a detailed review of current assets’ status, and an identification of related investment opportunities
  • A review of maintenance activities, combined with a performance-related, organizational structural re-design and capabilities program of development, in order to improve equipment and asset management
  • An investment plan review, with identification of additional/ alternative levers, and the prioritization of expenses according to preliminary estimation
  • A validation of the Capex amount expended on key projects, obtaining ballpark quotations from third parties and asset suppliers

Results

The three-year investment plan review permitted the identification of Capex adjustments of 105% in terms of initial budget value allowing the Private Equity firm to properly size the Capex and Opex amount required by the investment.

Industry: Food/Bakery
Project : Due Diligence