Alaris Consulting | Operations Due Diligence

operations due diligence

Alaris has the tools and experience to conduct an effective and timely operations due diligence.

Private equity firms are taking a closer look at the operating side of potential acquisitions. Improved operations can drive down costs while maintaining or improving customer service to facilitate growth.

Our fact-based approach is designed to meet the challenges associated with the short timeframe and limited data available during the due diligence process. Our approach includes several key steps:

Focused Data Collection

Alaris obtains the data required to understand current operations, potential cost reduction opportunities, and possible risks. Alaris applies specific performance and process indicators to guide our data collection and initial analysis.

Interviews

Alaris conducts thorough interviews with key executive management and operating personnel to understand the company’s strategy, operations, and performance. Alaris also interviews customers and suppliers to get the appropriate external perspectives.

Leading Practices

Alaris benchmarks the company’s performance and business practices against leading companies to identify potential areas for operations improvements.

Analysis

Alaris frames specific operating problems and the associated solutions that could drive additional value. Example problems include:

low forecast accuracy
high inventory levels
poor performance to schedule
high indirect labor cost
exposure to key raw materials sensitive to price changes (e.g., resin, steel, energy)
frequent expedited shipments
high cost of logistics associated with customer rush order or returns
the implications of offshore competition

Alaris then develops the specific operations improvement recommendations, including estimated costs, benefits, and timing to design and implement the changes.

Valuation Impact

Once the analysis is complete, Alaris estimates how and when specific improvement recommendations will affect the adjusted EBITDA used to value the company. Considerations include one-time costs to make changes, on-going costs of additional people or systems, on-going benefits from the operating improvements, and the timing of the improvements.

Prioritized Operations Improvement Program and Business Case

Coming out of the analysis is a prioritized set of operations improvement recommendations, along with a cash flow analysis that includes the costs, benefits, and timing associated with those benefits.

Please click one of the links below to read the case study.

Please click one of the links below to read the case study.