Food & Beverage

Situation

A food and beverage manufacturer supplying branded products to national and regional retailers was preparing for a potential sale. Financial performance was difficult to evaluate due to volatility in gross margins driven by commodity input costs, production yields, and inconsistent inventory reserve practices. Inventory balances included raw materials, work in process, and finished goods with varying shelf lives, making valuation and reserve assumptions a key diligence concern.

Our Role

We were engaged ahead of the sale process to help management present a more defensible view of operating performance. Inventory valuation and reserve methodologies were reviewed and refined to reflect actual spoilage, shrink, and production realities. Margin reporting was rebuilt to distinguish pricing changes, volume shifts, and input cost variability. As the transaction progressed, we prepared sell-side diligence materials that normalized EBITDA, supported inventory and COGS assumptions, and clearly explained seasonal working capital dynamics.

Outcome

The company entered diligence with financials that buyers could validate and rely on. Inventory and margin-related questions were addressed early with consistent support, reducing the risk of late-stage disputes or retrades. This improved confidence in earnings sustainability, supported valuation discussions, and helped the process move forward efficiently.