Situation

A family owned international manufacturer, marketer and distributor of crop protection products aspired to increase its overall sales by entering the Italian market with their product line. The company did not have a suitable distribution channel in Italy to distribute its products, nor did it have a full portfolio of products required for the Italian market to establish a new stand-alone company. The decision was made to acquire an established and complementary company operating in Italy.

Solution

The company’s CFO, who is now a NextLevel partner, established a cross functional project team to identify an acquisition target, negotiate a purchase agreement, perform due diligence, execute the acquisition and then integrate the acquired company into the organization. A list of potential targets was developed based on required attributes defined by the project team. One company was identified as the best fit and a five-year operational and financial model was developed to establish a purchase price. Also identified were operating and financial KPIs that would be used to track the new company’s performance. A purchase agreement was developed and the project team performed the due diligence, bringing in local advisors for legal and tax reviews. The new subsidiary was rebranded and renamed to reflect the new company and its now-expanded product line capabilities.

Results

  • The acquisition met all of the five-year operational and financial model targets.
  • The increase in market share for the buyer’s products was exceeded by at least 12 percent from year two to year five.
  • Market share of the acquired products exceeded the plan by at least 6.5 percent each year.
  • Gross margins exceeded the plan by 9 percent.
  • The success of this acquisition to expand the company’s global footprint became the benchmark to enter other markets in which the company did not have a suitable distribution channel to distribute its products.

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