AT-A-GLANCE: HILCO GLOBAL PRE-ACQUISITION DILIGENCE SERVICES

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.

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Our 360 Due Diligence Approach

Operational Diligence
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.

Success Story

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.

Our Team

David Dye Managing Director - Hilco Performance Solutions
Dan Ginsberg Managing Director - Hilco Performance Solutions
Rob Wilson Senior Director - Hilco Performance Solutions
Jesse Glossinger Director - Hilco Performance Solutions