Today’s financial and strategic buyers are seeking more granular information on how best to run a combined operation and maximize deal synergies. This is even truer in a manufacturing deal. Buyers are looking for ways to optimize the operational side of a deal in the early stages, specifically during the targeting, modeling and diligence phases. Having this intel early not only increases the accuracy of financial models, but also helps facilitate the handoff and integrate key operations goals during the final phase of the deal. In a manufacturing M&A deal, the key areas of operational focus pre-deal include the core supply chain areas of:
- Supply and demand planning (to increase working capital through inventory reduction and decrease forecast and supply planning errors);
- Strategic sourcing (to save in the cost of goods sold category and create a structured process for future sourcing);
- Manufacturing (to reduce overhead rates and increased utilization of fixed assets), and distribution (to reduce overall logistics costs through network optimization).
Additionally, these 10 crucial operational details are often overlooked during a transaction: