Ensuring Post-Acquisition Success: A Comprehensive Equipment Assessment

A private equity firm was evaluating the potential acquisition of an injection molding plant in Mexico. As part of the transaction process, the bank supporting the deal required a detailed assessment of the plant’s equipment. Both the bank and the private equity firm faced a key challenge: they were uncertain how to properly evaluate the condition of the equipment to ensure it was fully operational. The objective was to mitigate the risk of unexpected capital investments following the acquisition and to ensure the plant was ready for seamless operation post-purchase.

The HPS team assessed the client’s injection molding and peripheral equipment. This included speaking with shop floor employees, observing operations, and reviewing key equipment documentation and maintenance records. On-site inspections were performed across the 65,000 square foot facility to assess equipment condition, operational readiness, and safety compliance. Key evaluations also covered PLC functionality, power-up status, downtime, and spare parts availability. The team further analyzed costs like warranty, replacement, and residual value to identify areas for improvement and ensure optimal performance.

The HPS team assessed over 100 pieces of equipment, providing detailed insights into their condition, including cleanliness, operational readiness, and preventive maintenance plans. The majority of the equipment was found to be in good to excellent condition, with no immediate need for financial investment. Additionally, HPS evaluated safety practices and confirmed that there were no incident records related to faulty machinery. A few pieces of equipment were identified as nearing the end of their lifecycle. A financial analysis was conducted to determine any residual value and provide high-level estimates for potential replacement costs.

Informed the client of upcoming equipment replacement costs and the absence of past safety incidents.

Highlighted overall operational efficiency, boosting confidence in the acquisition.