Integrated Diligence Automotive

Our client, a large-cap multinational manufacturing corporation, engaged us to support their recent acquisition of a North American automotive safety and suspension components which had been performing at a Net Income loss consistently since acquisition. The operations were struggling to achieve expected performance benchmarks due to operational inefficiencies, fragmented systems, and cost management challenges, resulting in declining EBITDA.

Our team of experts conducted the upfront financial diligence in tandem with the operations diligence in three weeks. In the initial phase, we identified both immediate (low-hanging fruit) and high-impact opportunities for margin enhancement and EBITDA improvement. Our integrated team worked collaboratively to:

• Identify cost drivers by product line, program, and customer segmentation. Prioritize high-impact improvement areas for immediate action.
• Assess supply chain dynamics to identify cost-saving opportunities and evaluate vertical integration options.
• Analyze cost structures to identify opportunities for fixed and variable cost reductions.
• Evaluate production capacity and utilization to address underperforming processes.
• Investigate quality-related costs to reduce defects and warranty claims.
• Improve inventory turnover and working capital efficiency.
• Conduct profitability analysis at the customer and product level to focus on high-margin opportunities.
• Streamline processes between facilities for operational alignment and scalability.
• Mitigate supplier and customer concentration risks through diversification strategies.

We conducted a comprehensive cost structure analysis at both the P&L level and the program/project level by customer and location. This included a detailed margin assessment evaluating gross margin, fixed, direct, and variable costs. Additionally, we identified and reallocated added costs to determine their impact on overall margins, providing deeper insights into cost drivers and profitability across different segments.

We also developed a longer-term operational roadmap to achieve peak efficiency EBITDA. Within an additional six weeks of implementing our recommendations and providing operational support, EBITDA improved by 21%, with a projected growth potential of up to 283% with continued efforts. This approach ensured that our diligence and operational insights provided actionable, data-driven recommendations for sustained improvement in financial and operational performance.