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Business case

Buy-side due diligence for two major Canadian pension funds

Sub-industry: Frozen and canned products


Our clients, two major Canadian pension funds, required financial assistance in the context of the acquisition of 30% of the North American activities of a manufacturer and retailer of frozen and canned vegetables (FY21 sales: CAD 987m; FY21 EBITDA: CAD 107m).

Key Takeaway

The speed of our analysis was critical in assisting our clients under tight deadlines due to the intense competition for this transaction (expected enterprise value of c. CAD 1bn). During the first phase of the engagement, we identified salary inflation as the main red flag. During the second phase, we performed a detailed review of current trading to provide comfort on the gain in industrial margins observed over the past few years. We also estimated the level of target working capital to properly capture the seasonality of the business, which is highly dependent on harvest conditions. Finally, we provided recommendations on the implementation of key clauses when defining the SPA.

Accuracy Role

During our two-phase engagement, we assisted our clients in estimating the adjusted level of EBITDA (quality of earnings) and net financial debt (quality of debt) to prepare the non-binding offer. In particular, we identified the potential red flags of the business and revised the carve-out assessment performed in the sell-side assistance.