Fans, water heaters, ranges, window coverings and HVAC equipment for the RV market
When exit dates are looming on the horizon, PE firms seek to aggressively create and capture value before the sale. While there is a sense of urgency to make the final push, operating partners must be realistic about what can feasibly be accomplished in the remaining months.
We recently helped a PE firm that was looking to sell a portfolio company within 12 months to view its value creation opportunities based on the number of months it would take to complete. The operating partners wanted to identify and address the highest value, most feasible improvement projects.
The work began with a five-week diagnostic assessment in the each of the portfolio company’s five locations.
We analysed each category across savings levers. We then identified full potential and created a bottom-up view to focus on immediate benefits. Our analysis started with actual performance and identified initiatives that would close the gap to full potential. We then identified and eliminated non-controllable factors that would make it impossible to achieve a “theoretical” full potential.
We divided the projects across the four manufacturing sites and grouped them into three key categories:
The key actions required included kaizen events and targeted projects that focused on:
We presented an EBITDA bridge focused only on savings achievable within 12-15 months. This included an analysis showing the return and feasibility of each potential project.
The final step was to put the improvement projects into action. The PE firm knew it would need help to tackle everything on the list, including some of the highest-impact opportunities. Keys to success have included working at the point of impact to address the low-hanging fruit as quickly and efficiently as possible while outsourcing projects that require more skill and resources.
At a Glance
Client
Results
HVAC manufacturer for recreational vehicles achieves 500 basis points of EBITDA improvement in 12-15 months