Stout provided buy-side financial due diligence services to a middle-market Los Angeles-based private equity firm related to its strategic investment in a leading foodservice solutions provider. The target manufactures labels and essential consumables and provides automated labeling devices and technology-enabled food safety solutions to restaurants, convenience stores, and foodservice operators across North America and Europe. The investment supported the company’s continued focus on product innovation, technology platforms, commercial capabilities, and customer service.

We supported the client through quality of earnings analysis, net working capital and net debt assessments, and other transaction support. The target’s inventory-intensive operations along with various rebate / billback programs required a tailored approach to evaluating gross margin trends, including consideration of rebate reserves, inventory sell-through metrics, inventory costing methodologies, and the impact of standard cost updates implemented alongside new systems during the year. These matters required close analysis of period-over-period margin movements, normalization of inventory-related earnings impacts, and coordination with management to understand the timing and financial statement impact of operational and system changes.

Our due diligence services helped support the client’s valuation, purchase agreement negotiations, and post-close integration planning through calculating adjusted EBITDA, assessing working capital requirements, identifying potential deviations from U.S. GAAP, and providing other deal-critical insights related to inventory, margin quality, and financial reporting consistency.