Performance-improvement diligence quantifies $50 million EBITDA benefit, paving the way to successful exit

Our Impact

A leading distributor of lubricant, fuel, and diesel exhaust fluid for industrial and commercial businesses needed a clear and credible picture of their performance improvement potential to attract prospective buyers. That’s where West Monroe came in.   

We worked with the client’s leadership to assess and develop an independent perspective of value creation potential for more than 10 planned performance improvement initiatives. While our work was fast, it was far from cursory. We used the most granular data available to analyze operations from the bottom up—allowing us to quantify the impact of these improvement initiatives on financial performance and to provide actionable value creation insights and recommendations at the branch, customer, and product level. We also provided the leaders with the appropriate project management tools and value tracking milestones to execute against and deliver value for the next owner.  

The Full Story 

The challenge

The client wanted to make sure potential buyers could see their capacity to improve profitability. They currently had more than 10 key performance improvement initiatives in motion—for example, reducing fleet size and consolidating facilities. But quantifying the impact of these initiatives on financial statements proved challenging, especially under a tight timeline with constrained resources. 

West Monroe has worked extensively with the client’s parent company in the past, and its partners knew they could count on our data-driven approach, value-creation lens, and industrial operations expertise to deliver diligence that private equity investors trust.

An undeniably different approach

We know that data and insight instill confidence, so our team came ready with a data-driven approach—the same type of approach we use to help consumer and industrial products companies unlock value by moving from traditional to digital operating models. Our team of industry and M&A experts analyzed current improvement initiatives in detail, using transactional and operational data to calculate the impact and translate it into tangible estimates of future financial value. Here’s how: 

• We interviewed stakeholders to identify the origin of each performance improvement initiative and to understand its progress and the approach for calculating estimated value.  

• We leveraged West Monroe’s maturity framework—developed by our industry and M&A experts—to assess the integrity and likelihood of success for each initiative.  

• For each initiative that passed the maturity test, we quantified improvement capacity by conducting a bottom-up analysis that linked general ledger financials to customers, products, and value creation opportunities.  

• Then we prioritized the initiatives based on their ability to deliver value, the time required to realize that value, and resource availability. 

We then equipped the client’s management team with tactical guidance for delivering the promised value. We produced a roadmap and project charters, recommended a governance structure to oversee change, helped the company set up a value management office, and provided tracking tools and templates to measure success and incorporate it into financial forecasts. 

Real Results

In just two months, the client had the insight it needed to show potential investors that it has a tangible performance improvement opportunity: $50 million in EBITDA, to be specific. Our approach was instrumental in establishing the company’s value-creation potential. 

Just as important, the client’s management team is now better equipped than before to deliver the performance improvement potential that was factored into the future forecasted EBITDA plans. Our work left executives with a plan for prioritizing limited resources, as well as tools and capabilities to manage change.