Evaluating the Fleet Maintenance Practices of a Target Acquisition

A leading middle-market Private Equity firm was considering the purchase of a utility maintenance and service company that owned and operated a fleet of specialized heavy-duty work trucks.

The firm had concerns about the longevity of the aging fleet and needed help determining the quality of the current owner’s maintenance practices. The purchase of a deteriorating fleet could quickly lead to operational disruptions and a substantial increase in maintenance, repair, and replacement costs. The PE firm engaged Hilco Performance Solutions (HPS) to assess the fleet maintenance practices of the target company and perform a non-technical inspection of the physical condition of the assets.

Hilco Performance Solutions brought together experts from the organization that specialize in machinery & equipment appraisals, fleet maintenance, and shop management to participate in the engagement. The team conducted a comprehensive review of the target’s fleet maintenance policies, procedures, Evaluating the Fleet Maintenance Practices of a Target Acquisition CASE STUDY: PRE-DEAL DILIGENCE personnel profiles, and maintenance records in advance of an on-site visit. The on-site visit included interviews with the leadership team, a review of the maintenance shop and grounds, and an inspection of the available fleet assets. Within two weeks of completing the diligence, a comprehensive report was delivered to the PE firm, which included:

• A determination of where the firm’s current maintenance practices stand based on a fleet maintenance maturity scale.

• Observations on what is working well today.

• Recommended actions to improve maintenance practices that will reduce vehicle downtime, reduce maintenance & repair costs, and maximize useful lives.

• A categorization of the physical condition of assets (e.g., very good, good, fair, etc.) and an opinion on the remaining useful lives.

• An overall evaluation of operator interaction with equipment, interior, and exterior cleanliness.

• A directional opinion on the future expectations of maintenance costs based on our assessment of current maintenance practices and fleet condition.

Hilco Performance Solutions was able to leverage expertise available throughout Hilco Global’s operating companies to provide the PE client with an unparalleled level of diligence service. Service that gave both the PE firm and their lenders the confidence to proceed with the acquisition and eventually maximize the return on the fleet.