Dairy Due Diligence Dairy Technical Due Diligence

Dairy Business Due Diligence - Sellers side due diligence and buyers side due diligence

Sellers side dairy factory due diligence

Just like home staging when selling a house - Business staging is even more important as the increased value is likely to be significant.

We can assist in identifying areas that may be of concern to a buyer (show stoppers / high risk) and also identify areas for quick wins to increase the attractiveness of the business to a potential buyer.
Present your Dairy business in the best light.
The due diligence findings will give sellers and their shareholders the confidence in the business valuation and allow them time to correct / be aware of any weaknesses and their potential impact not only on the value but on the sale itself. There will be may questions from potential buyers and it is better to be well prepared for these critical questions and give buyers representatives reinforced confidence in the business.

Buyers side dairy factory due diligence

"Dairy factory due diligence or Milk Factory due diligence" is an investigation of a dairy manufacturing business and its facilities prior to signing a contract to buy the business or a part of it."

DAIRY TECHNICAL DUE-DILIGENCE

When it comes to dairy Technical due diligence we hit the ground running.
With over 40 years experience we carry out the due diligence including equipment, buildings, utilities and staffing, quality, safety and operational aspects of your overall due diligence process.
We can assist you in assessing the local market and competition as well as milk supply, quality and pricing.
We can also review the dairy business accounts to see if anything looks wrong, an experienced set of eyes to review costs and exceptions.
We can evaluate the assets and estimate replacement costs, we can also review budgets against investment to sense check the budget.

We appreciate that confidentiality is paramount and are happy to sign appropriate non disclosure agreements.
A common example of dairy due diligence is the process through which a potential acquirer evaluates a target company and its assets for acquisition.
We have carried out Technical Due diligenc on dairy businesses with turnover under $1m and also on multi site global dairy companies with a turnover greater than $2bn."

The financial aspects and profitability of a dairy company are critical but equally if not more important is the sense checking of how the profitability was achieved and if budgets, equipment and capex are appropriate for the dairy business to achieve its goals.
The summary included here is not comprehensive and should not be relied upon, it is for general guidance and indication only.

The objective of a due due diligence is to assist the client in evaluating the technical, operational and commercial capability of the target business and also assist in estsablishing its value. It is critical to employ the services of an experienced professional who can usually pick up dander signals instinctively where someone with less experience could miss out a seemingly minor issue which may cripple the business ongoing.

The dairy due diligence process will usually commence with opening up an online secure shared folder. The folder should be pre-indexed where documents for various parts of the Due Diligence can be shared securely with changes and acces password protected and logged.

This will be followed by a detailed preliminary information request from the site management to minimise time on site meetings and allow the business to prepare the necessary documents / information. There should be a priority highlighted for critical information as some information is more important. Prepare a valuation spreadsheet where the impact of findings can be collated e.g. inneficient dairy equipment in need of replacement will require a capital investment. Condition of buildings, drains, utilities etc etc.

Example dairy due diligence headings:

Set up a secure cloud data room in a structured way so that all parties have confidentail access to their relevant documents.

The Due Diligence information below is an outline guide only.
1. General and Legal:
2. Human resources:
3. Contracts / agreements:
4. Financial:
5. Technical:

Information to be gathered

is divided under appropriate headings, some examples are given below:

• i. Sales contracts with major distributors
• ii. Supply contracts with major suppliers - e.g. milk supply
• iii. Financial agreements including bank loans, lease liabilities and other loans
• iv. Insurance policies
• v. Inter company agreements
• vi. All Sales and Purchase Agreements
• vii. Business Plan and Projections:
• viii. P&L accounts
• viiii. Bank and cash position
• x. Receiveables
• xi. Stocks
• xii. Leases
• xiii. Fixed assets
• xiiii. Other assets
• xv. Creditors
• xvi. Financing
• xvii. Any other commitments / liabilities
• xviii. Tax
• xviiii. Leases
• xx. Employee liabilities
• xxi. Disputes / any Legal concerns
• xxii. Major agreements with other parties

The Dairy Technical Due Diligence

will usually be achieved by providing an independent opinion on the following technical and operational issues:-

• Identify key Technical risk areas (Red - Amber - Green) in the Dairy Manufacturers operations
• Review of installed dairy production and packing capacity and utilized capacities
• Review of existing dairy factory site (environment and buildings)
• Review and cost estimation of any planned factory expansion plans, budgets for dairy equipment and buildings. This includes risk assessment (delays, lead time and spill-overs)
• Review of new dairy products formulation and pricing
• Availability of spare parts of existing Dairy processing equipment
• Review of dairy Ingredient suppliers countries and quality / support / reputation.
• Review of projected capital expenditure for replacement, overhauling and upgrades / projects in progress
• Review of utilities (Effluent / waste, water, power, steam, compressed air and refrigeration)
• Review of technical competency of the staff of the company
• Review of competitiveness on a local and global scale based on product characteristics, quality, price service level and product development
• Review practicality of the business plan and the suggested project timelines for any new products
• Operational risk assessment. (production bottlenecks and construction / interface risk)
• Industry related risks / health and safety review
• Landfill
• PCB's
• Dairy Building construction / presence of asbestos
• Insurance / Fire risk / Buildings suitability and condition
• Security of supply and quality assurance of supply
• Evaluation and estimate of value of dairy equipment and buildings

The Dairy Technical Due Diligence may also include a review of commercial and other issues providing an independent Expert Dairy Consultant opinion on:-

• Dairy Market share, size, trends, competition and growth
• Review of existing dairy products formulation, pricing and mark-up
• Data on Dairy competitors / market share / imports / prices and volumes usually provided by the client.
• Consumer preferences
• Milk Industry Regulatory insights / Planning restrictions
• Staffing and ability
• Competitive advantage
• Achievability of the Dairy business plan projections
• Commercial viability of any planned new dairy products
• Emerging trends in the dairy industry in country and globally
• Dairy Export potential - Export data to be provided by the client for the dairy consultant to review

Dairy Benchmarking

Benchmarking helps to understand how the business compares with similar sized competitors

Utilities:

Electricity:

Water:

Waste Water:

Steam

Gas

Diesel / Oil

Compressed air

We can work independently or as a part of your team in the acquisition and disposal / sale process.