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Due diligence. Our pre-acquisition due diligence engagements have ranged from a limited scope that addressed one or two issues to a comprehensive assessment of operations, margins, personnel, and strategic direction at $1 billion plus companies with a number of worldwide locations. Caledonia consultants can swiftly exploit and integrate data from the company’s ERP/MRP systems, key performance indicators (KPIs), and quality systems to understand a company’s fundamental problems and opportunities. Our diligence reports address the investment thesis, identify cost-saving opportunities and potential risks, and are often relied on in providing financing.

Assessment. Our post-acquisition assessments typically arise when a sponsor wants a third-party to review a portfolio company’s performance, or a specific, troubling aspect of the company’s operations such as the urgent need to generate cash now, deleverage, or downsize while maintaining or improving margins.  An outside assessment is especially valuable in times like these when there’s a lack of transparency or when there are problems in a company’s corporate or IT systems that are causing scheduling and delivery problems and excessive or inaccurate inventory, among other issues. Caledonia’s lean-based assessments are also often used in developing a company’s strategic plan to achieve enterprise improvement targets. Our methods are based on a structured approach which we have created to meet the investment and corporate governance goals of sponsors. The approach is similar to that used by Danaher.

Enterprise improvement. We provide hands-on assistance to a portfolio company’s management to accelerate change. In our change-agent role, our professionals free up senior management’s time, enabling the company to progress faster and better.  Our lean transformations are designed to quickly and dramatically increase EBITDA, reduce capital requirements, mitigate downside risks, and achieve higher exit multiples. They often result in a one-time permanent improvement in EBITDA margins of five to ten percentage points or more, followed by ongoing continuous improvement. These results are based on implementing a lean business system that relentlessly strengthens competitiveness and increases cash flow. Our improvement plans are sustainable, metrics rich, and establish accountability for meeting operating goals and financial results, as well as systems improvements covering safety, quality, delivery and cost. When appropriate we provide interim managers in functional areas such as quality, materials, finance, and operations.

Transition. Portfolio companies sometimes face a one-time transition that they lack sufficient in-house resources to address; these include consolidating facilities, starting up new plants, launching a product, a crisis in the customer or supply base due to quality or delivery problems, sourcing abroad, preparing an asset for sale, or evaluating an operation in terms of whether it should be supported, sold, or closed. We exploit lean principles to mitigate potential execution risks and also to achieve step-change improvements.

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