Stabilisation project in a £70m private equity owned food ingredients business
Background
I was appointed by the private equity owners to sit alongside the CEO and FD of this recent MBO. The group which had operations in France, China and the US was falling behind their original business plan and were now missing successive profit forecasts.
The syndicated banking relationship was under stress and the credibility of the Finance Director was being questioned.
The company had one very major customer (70% of sales) and operated in commodity markets with significant exposure to Euro and Dollars.
The company was a major world buyer of one ingredient and was significantly exposed to price/demand fluctuations.
Prior to the buyout the Company had been run by one autocratic individual who had “honed” the business for sale with the business management being run on a shoe string and hence lacking the necessary resources and capabilities.
Key Challenges
FD had failed to extract key part of his role from the previous group FD causing a serious undermining of the group role.
Forecast had been extremely optimistic.
All parts of the business were failing to deliver on new product launches and projected sales opportunities.
New CEO was trying to run the business in a more consensual style leading to a long, ineffective decision making process and lack of focus.
Management information lacked consistency and could not be used for effective decision making.
CEO/Chair relationship was not delivering for the Business
During the assignment availability of major raw material deteriorated and prices spiralled.
Issues were uncovered concerning deteriorating market conditions that were not obviously disclosed during the deal.
Main customer put European and North American supply contract out to E tender.
Main Actions
Ensured realism around existing forecasts and following year business plan.
Established effective bank relationship through various meetings and presentations providing an openness around issues and actions in place.
Agreed Business priorities and ownership and then implemented a wide ranging Business Improvement plan as an umbrella to cover off these key priorities.
Delivered new reporting packs – Supported FD and CEO – side-lining previous unwelcome interventions.
Reviewed and advised on short term and long term management changes in the Business
Main Results And Achievements
Stabilised Bank relationship with robust forecasts and visibility of progress on Business Improvement plan.
Strengthened management with new Group FD, new UK MD and in conjunction with PE owners a new executive Chair.
Delivered visibility on sales and development pipeline and weekly challenge around progress.
Assisted business in its development for contract growing proposals in South America and China.
Delivered new three year supply agreement with Major customer.
Implemented formal management meeting structures and weekly peer review of Business improvement plan.