Stout provided buy-side financial due diligence to a Mexico-based private equity firm in connection with its platform investment in a recycler and manufacturer of polyester staple fiber products serving a range of industrial and consumer end markets. The business operated in a complex manufacturing environment with multiple product lines, recycled raw material inputs, and evolving customer programs tied to sustainability initiatives and engineered applications.

During our work, we navigated operational and financial complexity associated with the company’s integrated recycling and manufacturing processes, including varying inventory yields, product mix shifts, and customer-specific pricing dynamics across several end markets. We also helped evaluate the seller’s plans to open a foreign operational facility, including validating projected start-up costs and assessing the anticipated run-rate costs of engineering expenses expected to be incurred while the plant was under development.

Our team conducted a quality-of-earnings analysis focused on evaluating normalized profitability and the key operational drivers of the business. We assessed revenue and margin trends across major product categories and customers and evaluated adjustments related to non-recurring items, owner-related expenses, and operational initiatives. In addition, we supported the client through the purchase agreement process, including advising on financial definitions and key working capital considerations associated with the company’s inventory-intensive manufacturing operations.