Strategic Planning & Analysis Services for a Private Food Manufacturer

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Business Issue

Our client, a leading private investment firm with more than $1 billion under management, specializes in acquiring companies with revenues of $50 to $500 million and teams with the management of its portfolio companies to address opportunities within selected industry segments. One of its portfolio companies is a leading manufacturer of food items for retail, foodservice, and contract packer headquartered in the Midwest. The company’s accounts include some of the largest and most sophisticated food companies and brand names in North America and Europe.

Due to the economic climate during the recession, the company significantly underperformed relative to expectations which led to management team turnover and lender forbearance. In order to satisfy the needs of the lender to finalize a new structure and terms, the new management team requested assistance from Riveron to prepare a detailed 2011 plan and a assumption-driven cash flow model.

Riveron Approach

A three-person team from Riveron was engaged. After further definition of needs in collaboration with the Chief Financial Officer and Controller, the team began extensive interviews with company management. These interviews allowed Riveron to gain an understanding of business drivers, customer information, availability and sources of information, and capability of key personnel.

The detailed 2011 plan (including business unit analysis) was designed to contemplate organic growth including a significant new branded product line, commodity price fluctuations, required equipment investments, significant working capital needs, restructuring of costs, and relocation of headquarters. These analyses included profitability by channel, commodity price analysis and reconstruction and verification of the budget model. The output was used to help provide business unit analytics and was used in the form of a management presentation provided to private investment firm, senior management and lenders.

Next, a fully integrated, assumption-driven 13-week and 52-week cash flow model was developed for three separate and distinct business units. These models were consolidated into a total company 13-week and 52-week cash flow model. The cash flow models were used to help understand working capital needs during growth initiatives and determine the impact of these movements in conjuncture with the debt covenants.

Benefit to our Client

In addition to providing decision support to the new management team and board, the 2011 plan and cash flow model was useful to the lender. The company was able to secure both bridge and permanent senior debt to fund ongoing operations including significant growth through a new branded product line.

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