Prepping a successful carveout in the food industry

How we helped

• Restaurant, Hospitality & Leisure
• Digital
• M&A and Transaction Advisory
• Turnaround & Restructuring
• Sourcing & Procurement Transformation
• Operations
• SPG
• Organizational Transformation

At the beginning, EBITDA was around 4% for the meal preparation division of a large food company. The potential buyer thought there was value in it.

AlixPartners was brought on to assess and enable the acquisition of the food company as a stand-alone entity. While many deals at the time were tabled due to soaring interest rates, this one was set up for quick close and allowed the new parent company to enter the North American private label business and pursue rapid growth.

A $100 million food label         

In the first year, the food company had an EBITDA target of $98 million. Our team helped build a value creation program through post-close, encompassing G&A, commercial, procurement, distribution, planning, and manufacturing functions. The programs we put in place achieved a $130 million run-rate EBITDA improvement, as well as $20 million in one-time benefits.

The cash flow allowed the company to refinance $450 million of debt and potentially move toward an IPO sooner than anticipated.

Profitability first and last

Despite taking price increases based on rising commodity costs prior to close, the carved-out business gross margin had significantly eroded. We developed a customer and product-level profitability (CPP) model to enable targeted and realized price increases. Using our approach and working closely with the commercial and sales leads, we were able to achieve $65 million in surgical price increases within four months of the new company being formed.

In addition to the CPP margin enhancement opportunities, we identified $10 million in gross-to-net opportunities through deductions, payment terms, and bracket pricing.

Lastly, we created digital syndicated data dashboards to provide visibility into company’s key commercial drivers.

Seeing the company through the transition

AlixPartners’ experts served as interim chief financial officer and chief information officer, leveraging our strategic relationship with SAP to renegotiate licensing while architecting an alternative implementation that fit within the budget. Success on this workstream included ensuring an uneventful day 1 from a systems perspective and seamlessly transitioning the role to the newly hired CIO.

Our interim CFO developed a robust 13-weekcash forecast model, oversaw treasury and procurement, and led the HR team in negotiations for healthcare and other employee benefits. This work stabilized the business during the startup phase, gaining trust with new management, and seamlessly transitioning our role to permanent CFO.

Our work across procurement, manufacturing, demand planning, and S&OP created a leaner, more productive organization with optimized inventory and a 70% improvement in forecast accuracy. The forecast we did best on? The company’s future.