Operational Due Diligance
CID CapitalCategory: Develop, Grow, Improve, Small to Mid Market Companies
This highly successful private equity firm was considering the acquisition of a mid market fastener distributor with strong earning history. CP was retained to provide detailed operational due diligence prior to making a final offer on the potential portfolio company.
COSGROVE PARTNERS ACTION
CP facilitated a thorough review and analysis the business plan that had been provided to determine if the plan was achievable with the existing operational facilities plus the capital expenditure that is outlined in the business plan. Additionally, we evaluated the competitive environment to determine whether there was the potential for additional value to be gained by improving its operational function. Finally, we evaluated to determine whether there are other serious operational risks about which the potential buyer should be concerned.
Our process included:
- Detailed assessment of the top 10 regional and national competitors
- Interviews with 25 existing and potential customers
- Review of the reseller agreements in place with the existing product suppliers
- Review of the sales and marketing materials
CP developed a recommendation brief highlighting several operational concerns. The client chose to not move forward with a final offer and proceeded with an alternative investment opportunity.