Quick due diligence results in a well-timed purchase - Bain & Company

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Case Study

Quick due diligence results in a well-timed purchase

A leveraged buyout firm had identified a plastics packaging company as a potential acquisition target, but needed to quantify the potential benefits. Bain performed due diligence to help the client move quickly and make an early bid, which went unopposed. Within two years of the acquisition, EBITDA more than doubled.

  • min read

At a Glance

  • 12% pre-purchase EBITDA
  • 28% EBITDA 2 years later

The Full Story

The Situation

L-Box*, a leveraged buyout firm, had identified PackageMaster*, a plastics packaging company, as a potential acquisition target. But L-Box needed to quantify the potential benefits before it closed the deal.

For the purchaser, the value of the acquisition would depend on:

  • PackageMaster's ability to maintain a leadership position in its core business segment
  • the market potential of a new segment and PackageMaster's ability to compete in it

L-Box gave Bain four-weeks to perform the due diligence that L-Box needed so it could move quickly to complete the deal.

Our Approach

Bain focused on four key areas to quickly determine the economic value to L-Box of purchasing PackageMaster.

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Our Recommendations

Although competitors had technical and scale cost advantages, L-Box could still improve operating performance significantly.

The Results

Thanks to Bain's quick due diligence, L-Box made an early, preemptive bid for PackageMaster, which went unopposed. Within two years, the acquisition's EBITDA had more than doubled, exceeding L-Box's expectations.

 

* We take our clients' confidentiality seriously. While we've changed their names, the results are real. 

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