Case Study: $400M Food & Beverage Company

Companies frequently lack the resources and talent they need to address constant and shifting financial demands, which require agile, experienced leadership — positions that are oftentimes difficult to fill. 

When a company is left without experienced financial leadership, they can quickly become overwhelmed. Finding qualified financial leadership positions like the chief financial officer (CFO), controller or treasurer can take months of recruiting, interviewing, and onboarding — time that a company already lacking in resources cannot afford. Fortunately, there are options to help ensure the daily transactional work and reporting processes continue to run smoothly. 

The situation

The private equity owner of a $400 million food and beverage company needed to replace the company’s long-serving CFO due to insufficient financial planning and analytical support previously provided to the management team. 

The company faced financial challenges including the need to prepare the annual budget, the roll-forward of standard costs, the planning of the year-end physical inventory and the preparation for the annual audit (the prior year included a qualified opinion), all while managing a very tight liquidity situation with a new lender.

The private equity firm recruited a new CFO who ended up resigning within just three short months due to their unwillingness to handle the complex financial issues facing the company. 

BDO’s tailored approach

Our BDO Consulting Group, LLC professionals served as Interim Chief Financial Officer and Interim Financial Planning & Analysis (FP&A) Manager to help lead the corporate finance and accounting functions and to assist with numerous year-end projects. The private equity owner also replaced the CEO during the process, and we worked closely with the new CEO to improve profitability throughout most of the year.

Benefits to the client included: 

• Completing the annual budgeting process, including the operational steps needed for customer and product rationalization, customer price increases and manufacturing cost reduction initiatives.
• Improving the standard cost development and roll-forward process to incorporate past and projected inflation on critical commodities, which were used to identify real contribution margins by product.
• Improving the monthly financial reporting cycle, reducing P&L close timing and incorporating detailed management discussion and analyses into the monthly reporting package. 
• Finishing the annual audit timely, and without a qualified opinion, due to improving results and better financial forecasts of future profitability.
• Improving the cash flow forecasting model and meeting all debt servicing obligations as they came due, while eliminating a significant balance of past-due accounts payable.
• Reorganizing the financial function to develop better “operational accounting” capabilities more aptly suited to a food products manufacturer, as well as recruiting and training a new FP&A manager.
• Partnering with the CEO and Chief Commercial Officer for seven months on customer pricing and production decisions as well as new customer programs to significantly increase margins.
• Participating in the recruitment of a new CFO and helping him transition into the role.

The results

The company’s EBITDA improved from $20 million to an annual run-rate of more than $60 million nine months later, with improved liquidity and reduced credit line borrowings. The company was able to demonstrate significant improvement in top-line revenue and profitability growth, and the private equity owners could now consider exit strategies that would improve their return. As the company continues to progress, the new CFO remains focused on the policies, processes and culture that we helped to implement.

Turnaround and restructuring services as well as operational value creation services within the United States are offered through BDO Consulting Group, LLC, a separate legal entity and affiliated company of BDO USA, P.C., a Virginia professional corporation. Certain turnaround and restructuring services may not be available to attest clients of BDO USA under the rules and regulations of public accounting.