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Our journey with a leading food brand: from pre-acquisition due diligence to value realization

Case study

Our journey with a leading food brand: from pre-acquisition due diligence to value realization

A leading consumer-focused private equity firm engaged us in the pre-acquisition diligence phase as they were looking to validate the procurement assumptions stated in the sell-side presentations of an aggressively expanding food brand in the bakery segment. EP already had a strong track record of delivering ambitious mandates across their multiple consumer goods PortCos, and in this instance, PE wanted to leverage our expertise in the food sector to inform their investment thesis.

We advised our PE sponsor on the list of priority procurement questions for the sell-side bankers, interviewed the key management team members at the Target food company, and benchmarked parts of the sparing information available in the data room (on key contracts). Based on this input, we presented our view on the opportunities and risks across the supply chain of the target company

Findings from our output were leveraged to put an aggressive bid for the Target. On successful acquisition of the asset, we were asked to present the findings to the management, who recognized the need to strengthen their supply chain capability to match the growing scale of their operations.

EP was hired for successive phases of value realization – a 6-week diagnostic followed to build on the findings in the due-diligence phase. And following the diagnostic findings, EP team were hired to provide the hands-on support to make the highlighted opportunities a reality. Implementation was focused on achieving 3 key outcomes:

–            Deliver savings opportunities identified in the diagnostic

–            Build parallel supply sources to reduce the risk in the supply chain, given the global supply chain crisis

–            Strengthen the capability of the existing procurement team

Over the course of following 7 months, we worked shoulder to shoulder with our client team to deliver this ambitious programme, setting-up a cross functional group including procurement, marketing, R&D, operations, and finance.  From Enabling procurement side, a team of expert procurement consultants were deployed to set-up and execute the sourcing plans.

Key spend categories included comanufacturing, packaging, logistics and ingredients (animal-based protein, plant-based protein, chocolate, flavours, oats, wheat, maple syrup, sugar)

Our team implemented several sourcing levers including executing global RFPs, value chain optimization moving from distributors to manufacturers, conducting data drive negotiations, optimizing inventory and logistics, and working very closely with suppliers and client R&D to deliver specification optimization opportunities across multiple ingredient categories.

A high intensity PMO was put in place to execute a strong governance routine including regular updates to the Board and the Private Equity sponsors.

Results

–            Programme delivered >10% savings across the addressed spend

 –           Dual sourcing was put in place across the key categories to reduce the supply risk and to support the growth ambitions. Multiple suppliers were identified and qualified across all categories to enable fast reactions across the supply chain

 –           Hands-on training was delivered to the current procurement team acquainting them with best-in-class procurement process and tools to execute the sourcing agenda