CEO asked Elliott Davis to answer: “To what extent can the operations of the two companies be consolidated? What can I expect in the way of synergies? Which acquisition scenario generates the most cash flow?
Global manufacturing company was considering a strategic acquisition of a US-based competitor.
Customer was interested in understanding the potential to achieve operational efficiencies and synergies through asset and footprint optimization. This required determining the suitability of consolidation – both the likelihood of success and the expected SG&A gains.
The customer was also interested in translating the operational findings into a flexible financial model that would help inform potential value creation and deal structure under various acquisition scenarios.
Elliott Davis broke the questions into workstreams:
On-site due diligence at the target’s headquarters
- Interviews with leadership team
- Extensive tour of target’s facilities
- Assessment of assets, process controls, quality, and management systems
- Considerations for asset relocation and site consolidation
- Full reconciliation of financials by business and product; cost allocations
Pro Forma financial projections
- 5-year projections of fully-synergized net income and free cash flow vs. target’s normalized financials
- Review of multiple acquisition scenarios
Elliott Davis delivered a complete view of the investment to answer critical questions.
- Savings opportunities from operating efficiencies and labor
- Risks and timeline for consolidating operations
- Cash flow forecast over five-year period (including one-time costs
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