Construction Equipment Due Diligence for Strategic Investment
A leading middle-market Private Equity firm was supporting the sale of a specialized rail and emergency response construction company. The Firm engaged Hilco Global’s Performance Improvement practice to review operational practices, general functionality, equipment-specific functionality, staff responsiveness, and maintenance. The team evaluated equipment, trailers, trucks, passenger vans, and tractors.
Before the on-site assessment, the team reviewed data to identify the optimal locations to visit. This decision was based on a cross-section of total assets across various asset class families, considering factors such as age, type, location, and both value and quantity of sub-families.
Hilco Global deployed four personnel to visit eight locations throughout the U.S., ranging from Mississippi to California, to observe the equipment in the field and engage with local team members. During their site visits, the team photographed the equipment, observed it in operation, and used an assessment form to evaluate the functionality specific to each asset class. Additionally, they interviewed key maintenance personnel to gather insights on the maintenance and operation of the equipment.
The team created a comprehensive assessment report based on field observations, interviews, and all relevant data supplied by the customer. The report indicated that the equipment had a high functionality rating, with an average age ranging from 3.8 to 5 years. Additionally, the equipment that had high mileage was well-maintained.
The maintenance records were maintained by both the largest OEM and an internal system. All equipment was taken out of service when maintenance was required.
The final recommendation from Hilco Global’s Performance Improvement practice stated that the fleet was well-maintained, and both the operational practices and maintenance plans were effective. Based on the assessment report, the private equity firm was able to facilitate the sale of the company.