How precision targeting and due diligence increased a US manufacturer’s revenue by 34%

Posted by | Fuld & Company

Objective 

A Private Equity firm sought to grow one of its portfolio companies through add-on acquisitions. The portfolio company, a leading manufacturer of precision components for the automotive and aerospace industries, aimed to expand its product lines and manufacturing capabilities by acquiring complementary businesses.  

Solution 

• Target identification: Fuld initiated a comprehensive market analysis to identify potential acquisition targets that produced precision components for high-growth industries such as aerospace, automotive, and defense. 
  • Evaluated over 200 industrial component manufacturers, narrowing the list down to those with advanced capabilities in CNC machining, metal forging, and additive manufacturing. 
  • Presented a shortlist of 24 companies that showed strong synergies in terms of technology, customer base, and geographical reach. 
• In-depth due diligence: Once acquisition discussions progressed, we provided extensive due diligence support tailored to the unique needs of the sector: 
  • Financial review: Analyzed financial statements, revenue streams, cost structure, profitability trends, working capital, and capital expenditure needs. 
  • Operational assessment: Evaluated production compatibility, supply chain reliability, workforce skills, scalability, and integration potential. 
  • Risk analysis: Identified risks related to supply chain vulnerabilities, fluctuating raw material costs, and dependency on specific customers or industries. 
• Valuation analysis: We provided detailed valuation support using multiple methodologies to ensure that the acquisitions would generate favorable returns and align with the portfolio company’s long-term strategy: 
  • Developed financial model incorporating potential operational improvements and margin expansion through lean manufacturing practices. 
  • Developed a range of valuation analyses and returns summaries utilizing multiple methodologies including LBO, DCF, and relative valuation. 

Outcome 

• The PE firm successfully closed deals with two precision component manufacturers within a 10-month period, establishing a strong market presence in key Midwest manufacturing hubs. 
• The portfolio company saw a 34% increase in revenue within the first year of acquisition, driven by new aerospace and defense contracts secured as a result of the acquisition. 

Tags: Financial Services, Mergers & Acquisition, private equity