Financial due diligence for the acquisition of a perfume and cosmetics packaging company
Summary
ST strategy carried out the financial due diligence for a perfume company seeking to acquire one of its suppliers.
Perfume and cosmetics brands rely on specialised suppliers for packaging, filling and labelling. Integrating this capability provides greater control over quality, lead times and costs.
FragranceHouse*, a perfume company with a long track record, considered acquiring PackFill*, a packaging and handling company for perfume and cosmetics brands, of which it was already one of the main clients.
ST strategy carried out the financial due diligence on the target company.
Perfume and cosmetics
Financial due diligence
Acquisition
The full story
Opportunity
Before closing the transaction, the buyer needed an independent view of the quality of earnings, the balance sheet and the company’s risks in order to set the price and terms.
Recommendations
Based on the analysis carried out by ST strategy, we worked on:
- Quality of earnings: Analysis of revenue, client concentration, margins and non-operating expenses.
- Balance sheet and working capital: Review of working capital, unreconciled balances, provisions and balances with shareholders.
- Price adjustments: Identification of the adjustments to apply to the price and deal structure.
- Negotiation: Update of the report with the latest available figures and support in the price-adjustment meeting.
* The confidentiality of our clients is a priority of the company. Although we have changed their names, the information is real.