The Client, a billion dollar transportation and trucking company, was in the negotiation stages to secure a letter of intent (LOI) for a line of business (LOB) potential sale transaction with a private equity firm. The Client previously failed to close a similar deal due to lack of strong analysis related to revenue and margin performance. The company was resource constrained and did not have the bandwidth to provide the detailed analysis to support the business changes stemming from recent managerial decisions. The rapidly growing company also was challenged due to systems/reporting limitations and data integrity issues.
DLC was hired to build detailed level sales and gross margin history as well as evaluate the quality of the pro forma P&L that was provided by the target. In addition, DLC helped answer questions from prospective buyer and their Big 4 accounting firm. DLC quantified strategic managerial decisions and build long-term EBITDA forecasts using a comprehensive bottom-up approach, and DLC used a combination of three independent methodologies.
The DLC Approach
Our consultant spent 9 months working remotely with the CFO, Managing Partners, the Controller and IT. DLC re-built historical sales and margin data, sourced from multiple systems, in an Excel environment. This required considerable technical, accounting and finance skills. DLC provided historical and pro forma detailed operating models for sales and margin trends by quarter/year, customer, segment class, and sales rep. DLC quantified the portion of growth resulting from strategic management decisions rather than market environment using an EBITDA bridge, provided net working capital and cash flow projections, CapEx budgets, sales assumptions, and long-term EBITDA projections.
Re-built historical sales and margin data, sourced from multiple systems
Provided historical and pro forma detailed operating models for sales and margin trends by quarter/year, customer, segment class, and sales rep
Client secured an attractive LOI
DLC recommended new ways to look at business performance internally in addition to reverse engineering of sales forecasts to explain growth assumptions. As a result, the client secured an attractive LOI and the DLC team continued to execute all documentation and processes necessary to close the deal.