Enhancing EBITDA: Assessment
The Situation
A leading wholesale distributor of HVAC equipment was acquired by a PE firm with an investment thesis surrounding bolt-on-acquisitions. With the sponsor poised to sell the much larger New-Co., Accordion was brought in for a high-level two-week EBITDA enhancement assessment in order to discern & quantify potential quick-wins that could be implemented across the various business units before the sale in order to secure an EBITDA adjustment to benefit the seller.
Services
EBITDA Enhancement
Budgeting & Forecasting Process Improvement
Working Capital Improvement
The Execution
Risk assessed Company financials to determine the most potentially impactful areas to assess over the two-week engagement.
Reviewed non-equipment sourcing spend to quantify the savings opportunity associated with:
- Ordering accessories at the most favorable price historically purchased over a TTM period
- Ordering dual-sourced accessories with the largest vendor, and negotiating bulk discounts
Reviewed inventory balances for 3 of 6 business units, and:
- Identified potential target level ranges using TTM lead days
- Identified gaps in inventory data for remaining 3 business units
Reviewed census detail across 5 of 6 business units, to quantify savings opportunities:
- Benchmarked Company performance to peers & top performers
- Benchmarked individual business unit performance against one another
- Drafted existing and proposed reporting structure for F&A department
Transitioned workpapers & examples of potential savings opportunities to Company management for more thorough review.
The Results
Accordion identified the areas for EBITDA enhancement that would provide the quickest return on investment and quantified the potential savings opportunities for each of the levers associated with the assessment. Accordion transitioned these findings to Company management for more thorough review in determining which levers to execute on prior to the sale.