Tired Company in a Mature Industry

TypeSpecialized Due Diligence
Quick Facts$100 million manufacturer of corrugated box-making equipment (“BoxCo”) and replacement parts. International in scope. Majority owner a large US private equity group.
ChallengesBoxCo was a division of a large multi-national corporation. The company had a long history of operations, but in recent years, the financial performance had been erratic. For a number of reasons (long sales/order cycle, weak profitability, some quality issues), the private equity group wanted more due diligence depth with respect to the industry and customers.
ApproachMcHugh & Company was retained to assist in the overall acquisition due diligence, with a special focus on key customers and industry dynamics. We worked with BoxCo management and the private equity team to craft a contact strategy with different customer classes. In addition, we organized a detailed analysis of the corrugated box equipment manufacturers and industry trends.
ResolutionThe customer contact program provided the new owners with some important information:
  • many customers had long-term relationships with BoxCo and believed in their product line
  • they were disappointed in some key people in the sales team and felt that being a subsidiary of a large foreign parent was a negative
  • the spare parts program was weak; BoxCo was poorly managing this part of the business and squandering a growth opportunity
  • industry growth was expected to be flat and buyers were being cautious about capital spending
  • US competition was intensifying from new foreign entrants

Links to the other specialized due diligence cases:
  1. Customer Calls Provide Valuable Feedback
  2. Does Acquisition of Unprofitable Competitor Make Sense?

To view a list of all McHugh & Company Case Studies, click here.