Diligence with a 360-Degree Perspective
We understand the value of due diligence and the impact it has on the outcome of a transaction. That is why our pre-acquisition diligence services provide clients the clarity needed to approach transactions with 360-degree confidence.
At Hilco Global, we perform diligence engagements that provide private equity firms with quick, actionable insights that validate existing investment theses, analyze current and planned operating initiatives, and develop a road map for post-deal value creation success. Our team consists of financial and operational experts in the areas of Production and Manufacturing, Distribution & Transportation Operations, Procurement, Finance and Accounting, Human Resources, IT, and M&A Integration. We have extensive experience delivering on both buy-side and sell-side diligences. We work with private equity firms by engaging in a comprehensive approach to due diligence across three service offerings. Hilco Global’s flexible diligence approach permits clients to tailor the exact scope of work and priorities based on the situation at hand — their specific diligence gaps, deal calendar and other deal specific factors.
Our 360 Due Diligence Approach
Successful transactions are grounded in eliminating or “pricing in” the many unknowns revealed through a proper diligence process. We help clients thoroughly appreciate and plan for potential unknowns as well as identify value-added opportunities through:
- A comprehensive assessment of all aspects of the operations including capacity utilization, labor, systems, policies, suppliers, and customers
- Identifying direct and indirect cost opportunities
- Reviewing the Sales & Marketing function including product offerings, customer segmentation, and pricing strategies
- Understanding the impact of recent and in-flight initiatives on financial performance
- Performing detailed opportunity and cost-to-serve assessments
- Identifying opportunities to improve profitability by product line and customer
- Evaluating key talent and organizational design
- Discovering weaknesses and potential risks
- We also have the unique ability to assess the remaining value, effectiveness and lifespan of operating facilities and real estate, machinery and equipment, inventory, patents and licenses, and other assets. This is done by leveraging Hilco’s proprietary database comprised of continuously updated operational and financial benchmarks from more than 2,000 annual asset and enterprise appraisals.
Prospective Financial & Data Diligence
Our prospective financial and data diligence includes a thorough review and analysis of financial information to: Identify opportunities to improve relative to existing long-term business plan Develop both P&L and balance sheet pro-forma financial models to estimate margin impacts, liquidity, borrowing needs, sensitivities and free cash flow, including 13-week cash flows.
- Review financial controls processes and identify needs and risks
- Assess financial reporting and closeto-report work processes
- Analyze order-to-cash (O2C) business processes and linkages to DSO and Receivables performance, as well as financial controls and management decision-making processes
- Understand inventory and payables working capital management requirements and opportunities
Historical Financial & Accounting Diligence
Unearthing hidden value also requires careful and sometimes even ’forensic’ consideration of a firm’s financial performance. Our historical financial and accounting diligence service delivers this by:
- Evaluating the impact accounting policies and practices have on the balance sheet, P&L, and free cash flow
- Reviewing working capital accounts and assessing the historical performance of receivables, inventory, and payables
- Analyzing the P&L statement for recurring and non recurring items
- Evaluating cash considerations and reviewing off balance sheet contingent liabilities
More importantly, we can go deeper into the business by virtue of our forensic accounting and fraud detection specialists. This brings advanced data analytics and report automation into the diligence process to reduce required time and resources, and leverages Hilco Global’s deep expertise across the financial services industry.
A leading middle-market private equity firm planned to acquire a components supplier to the plumbing and electrical end markets. HPS was engaged to perform operational due diligence and quickly identified over $2 million in annualized savings across the operation, a projected improvement of more than 15%. As a result of the diligence, our client was able to purchase the target at a fair price and maximize their return moving forward.
The focus of the diligence was to identify opportunities for post-deal cost reduction and M&A synergies that would justify the acquisition. Our work entailed a comprehensive review of all operations and activities occurring at the target’s primary manufacturing facility. The target had numerous shortcomings ranging from production quality control to supplier management, which yielded an opportunity to achieve up to $2.3M in annualized savings through both immediate and longer-term changes. Accompanying the diligence was a scenario-based sensitivity analysis and an implementation road map to ensure the client’s realization of expected outcomes and enable effective post-acquisition integration.
Managing Director - Hilco Performance Solutions
David is an experienced professional with 30+ years of experience in business transformation and change management he uses to identify opportunities and deliver profitability improvement. He has lead leadership positions across numerous disciplines in both functional and operational roles. David has his MBA in Finance and IT from the University of Illinois and spent his career in the energy industry and rotating equipment manufacturing, with a wide range of experience including wholesale distribution, manufacturing, and convenience retailing.
Example experience includes:
- Directed a $60M program management office (PMO) to implement strategies that maximized gross margin performance across sales, commercial optimization, supply, and trading functions.
- Completed five business unit performance improvement assessments using private equity, Six Sigma / Lean, and financial assessment tools to identify opportunities, resulting in $350-$630M in cost savings.
- Established a central pricing office and revamped the annual price adjustment process, which resulted in the highest price increase and capture rate in recent years. Improved execution, stakeholder engagement, and performance management.
- Spearheaded a project to capture $100M per annum in procurement savings by leveraging central sourcing, rebalancing resources around key commodities, and clarifying local versus central accountabilities.
- Organized a six-month manufacturing project to redeploy 1,200 FTEs across eight operating areas, resulting in the safe startup of a $4B+ investment and securing $1B in cash flow per annum.
- Achieved $80-100MM in marketing, sales, and logistics procurement savings by changing reporting relationships and mix of 60 U.S. FTEs, closing capability gaps, and aligning resources to strategic priorities.
Specific areas of experience include sales operations, planning and finance, business development, supply chain, IT and large-scale business transformation. David has worked in numerous functions and industries and has certifications in project management (PMP), pricing (CPP), and Six Sigma.
Managing Director - Hilco Performance Solutions
Value Creation and Process Improvement, Private Equity, Data Analytics and Automation Specialist
Dan brings over 20 years of experience in consulting and leadership, supporting company management, private equity sponsors and other key stakeholders in realizing EBITDA and cashflow results through operational and strategic performance improvement initiatives. He has a track record of more than 250 projects with ~150 clients and ~100 sponsors, delivering over $900 M in measurable benefits and much more in exit values. He specializes in both stable and distressed middle market businesses, leveraging his knowledge of supply chain & operations, finance, data analytics & automation and building high performance teams across a wide variety of industries. Dan studied Economics in a five-year bachelors of science/masters program at the George Washington University where he graduated magna cum laude. Select experiences from his career include:
- Led operational turnaround of a Top 10 Global Financial Services company, achieving $145M in benefits over 3 years and 4 operating cos.
- Delivered $20M in EBITDA gains through direct procurement and logistics optimization for an international player in the water filtration market.
- Achieved a 30% cash flow gain for a PE-owned $500 million marketing services company through AR and Order-to-Cash (O2C) initiatives.
- Conducted an assessment of the manufacturing processes and facilities of specialty chemicals carve-out, ultimately leading to double-digit savings through Lean, 5S, global supplier sourcing, freight, transportation and organizational change initiatives.
- Delivered $7M in bottom line annual benefits to the largest provider of geothermal liners through strategic sourcing of resins and other direct materials across 4 continents.
- Developed a truck and rail transportation network analysis and performance improvement program that reversed a trend in margin deterioration for a major N. American paper manufacturer.
- Was an early-mover in providing data analytics and automation solutions to middle market organizations, providing game-changing results by leveraging a talented resource base in combination with Alteryx, Tableau, PowerBI and other workflow, visualization and AI software tools.
Dan has worked in many industrial, consumer, retail and services industries and has substantial onsite experience working directly with executives and senior management on due diligence, performance improvement, value creation, carve-outs and M&A.
Senior Director - Hilco Performance Solutions
Rob is a Financial Services Executive with a proven track record with over 20 years of experience in the fields of finance, strategy and product management. Overall, he has achieved impressive results due to his collaborative nature, strong work ethic and obsession for finding a better way. Rob has a BA in Economics from the University of Michigan and an MBA in Supply Chain Management and Finance from Michigan State University.
Select experiences from his career include:
Director - Hilco Performance Solutions
Business Transformation and Strategy Professional
Jesse is an analytical and skillful leader with over 20 years of experience in corporate finance, supply chain and strategy in the automotive and financial services industries, including four years of international experience in Shanghai. Overall, he has built an impressive track record of success across several roles driven by a strong work ethic, being a trusted business partner, and bringing creativity and innovative ideas to his work each day. Jesse has a BBA in Finance from Western Michigan University and an MBA from Michigan State University.
Select experiences include:
- Controlled cash flow of $5B - $7B annually for an automotive’s North American business unit; worked in partnership with finance and operating teams to improve forecast accuracy and reduce working capital requirements to achieve KPI targets. Built a new cash flow forecasting model to improve process efficiency and accuracy
- Managed a collaborative effort with senior leadership team to develop a strategy for the International Markets business unit that will drive share and revenue growth as well as substantial improvements to EBIT
- Led the design, development, and implementation of a profit forecasting and variance analysis system that consolidated reporting in multiple markets, drove process efficiencies, and enhanced data analysis capabilities
- Led team responsible for controlling material cost and $1.6B of capital investment for future vehicle lines; worked in partnership with functional teams to drive design, sourcing, and make / buy decisions that achieved cost targets
- Supervised a team responsible for leading development of the annual budget, monthly forecast, quarterly actuals, and 5-year business plan process for $20B of net revenue in the APAC region
- Integral part of team that consummated a $225 million bridge financing deal for an electric vehicle start-up. Led development of financial projections and interfaced with advisors and investment banks throughout the due diligence process while controlling the company’s liquidity position
Jesse’s breadth of finance, supply chain and strategy experience spans North America, China, and other International Markets in the Marketing, Sales, & Service and Product Development functions as well as various Financial Planning & Analysis roles