Client Success Story

Auctus | Commercial due diligence

The problem

The client wished to invest in a UK-based consumer food processing company with an annual turnover of around £30 million per annum. The target company supplies food products to the domestic UK market mainly in foodservice chains.

In order to evaluate the rationale for investment, the client needed to understand the strength of the targeted business and its financial health.

The solution

Farrelly Mitchell performed an extensive commercial due diligence red flag report of the target food processing company. The study included market landscape and business model analysis with an accompanying positioning statement. It encompassed further analysis of size, development and key trends in the overall sector in the UK and the target business’s main markets.

The competitive landscape and business model assessment performed focused on bespoke products, smaller batches, flexible production set-up to serve customer demand for frequent changes and innovative products.

In addition, an overall assessment was carried out to gauge how attractive the target company’s market segment & business model is in the context of the industry overall.

A benchmarking exercise was carried out to assess the profitability of the target business versus its peer group, so as to fully understand the sustainability of the company’s profit margin in the medium/long-term.

We carried out customer analysis to evaluate the customer base and potential for stable customer relationships aimed at creating a view for financing banks. The study concluded with both a living wage regulations assessment and supply chain assessment.

The results

A thorough and all-encompassing commercial due diligence red flag report was delivered to the client inside a reasonably short timeframe. The study of the target food processing company provided significant insight for the client, ensuring a greater understanding of the target, its market and wider supply chain.

Client endorsement

“We retained Farrelly Mitchell to complete commercial due diligence for a consumer food processing company in the UK. They completed this mandate within a tight timeline and importantly provided us with very valuable insights into the Target company, its market and wider supply chain.”

– Christoph Stockbrugger, Associate, Auctus

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