Situation
A Private Equity Firm was looking to acquire a Private Label manufacturer of cleaning products (Kitchen and Laundry). The PE firm had secured an exclusive with the bankers for the target company and were interested in conducting a comprehensive diagnostic of the category to assess the market opportunity and upside potential.
Approach
- Examined performance of brands and private label products within the category – sales trends, share, distribution, geographical footprint, etc.
- Examined pricing and merchandising activity by different channels
- Conducted a detailed analysis of the target company’s performance
- Understood consumer perception and behavior for the category and target company
- Projected future opportunities for the target company
- Based upon the above, came up with a perspective on acquisition for the company
Results/Value Created
- Manage price-differences across channels to ensure that consumers are not driven from higher margin channels to lower priced/margin channels
- However, its own branded offerings had extremely limited share, declining sales, and were positioned in the Value Tier
- Given this, recommended that the target company needs to focus on contract manufacturing – the branded products should be rationalized
- $250MM acquisition completed successfully
