Corporate Due Diligence for Food Processing Industry

Corporate Due Diligence for Food Processing Industry

Ma Foi enabled a leading food business company to make an informed decision on a potential Joint Venture

Situation

The client is a diversified business house with over 50 years of operations, and food products and retail as one of its businesses. On a mission to grow 3 times in as many years through related/unrelated diversification via organic and inorganic growth, the client appointed Ma Foi for growth advisory services. We conducted a well-rounded and unbiased assessment of a potential target from a Marketing, Operations, Financial, People and Legal perspective.

Corrective Action

The project was conducted by Ma Foi in two separate phases:

During the first phase Ma Foi detailed the strategic approaches for the possible ways to achieve growth – mature products v/s new products, market penetration v/s geographic spread, inorganic v/s organic, and premium products v/s low-cost products. After a thorough diagnosis, Ma Foi sought the client’s choice among recommended strategic avenues and obtained commitment on implementing the chosen avenues.

In the second phase Ma Foi conducted a due diligence study for a factual assessment of the key factors that enable informed decision making. The following functional aspects were covered in the study:

• Market – Through primary and secondary research, we assessed the following factors:

a.Market potential and customer acquisition cost in the industry along with the risk involved

b.Distribution channels and coverage potential

c.Market response to products and customer preferences

d.Feasibility of the business model

e.Brand health check

• Operations – Ma Foi conducted a check on the client’s existing production process, the raw material and consumable supply chain, the workforce and machinery deployment pattern and factory maintenance operations.
• Finance – Ma Foi conducted a check on the historical health and current health, cost of operation, raw material, sales, manpower, other overheads and expenses, outstanding, loans and equities structure

All the investigations were further validated by internal and external sources

Result

Ma Foi presented a well-rounded perspectives to the client on whether to pursue a particular strategic avenue or not. The ‘Go’ and ‘No Go’ recommendations were based on favourability for investment, level of significant risks and impact ability (ROI) post-investment.