Operational & IT Due Diligence Finds 8% EBITDA Improvement, 5% Working Capital Upside

A private equity firm was evaluating the acquisition of a leading manufacturer and importer of machinery and equipment. The financials checked out. The business had a strong market position. But the deal team wanted to go deeper.

They brought in TriVista to conduct operational and IT due diligence to identify levers to continue expanding EBITDA, validate capacity to support growth, reduce current operational risks, and build an actionable value creation plan.

What we found helped update the investment thesis and financial proforma. We identified an 8% EBITDA improvement opportunity, a 5% reduction in working capital, and specific operational risks that needed to be addressed to support the growth plan.

This is crucial because the PE industry has fundamentally shifted. According to Gain.pro’s 2025 Private Equity Value Creation Report, revenue growth now accounts for 54-70% of total value creation at exit, up significantly from earlier periods when multiple expansion contributed 40-45% of returns. TriVista aligned the investment thesis with EBITDA improvement opportunities.

The Challenge: Identifying Operational Cost Update and Ability to Support Growth

The target was a manufacturer and importer of machinery and equipment with operations across multiple locations. The PE firm needed to understand whether the business could deliver on its growth thesis and where operational improvements could drive additional value.

The core questions were straightforward: Can this business execute the plan that the firm was underwriting? What operational risks exist? And where are the value creation opportunities?

We approached this through a holistic operational and IT assessment to identify and quantify value-creation opportunities.

Our Approach: Validating Operations from the Ground Up

We started by developing a baseline understanding of the deal hypothesis and business operations. Then we conducted functional assessments through site visits, detailed interviews with key staff members, and in-depth data analysis.

Operations assessment:

We evaluated operational governance, manufacturing efficiency, supplier base (supply chain), quality systems, and operational scalability. This included walking production floors, reviewing maintenance processes, analyzing capacity utilization, and assessing whether current leadership, operations, and supply chains could support the projected growth plan.

IT assessment:

We evaluated the technology infrastructure supporting business operations to understand if the current systems scale with growth, if there were any integration risks, and what technology investments would be required to support the value creation plan.

We used this approach to validate current organizational performance, flag any risks or concerns with the acquisition, and identify value creation opportunities to implement in the future state.

What We Found: Opportunity for 8% EBITDA Increase

We conducted a detailed assessment of savings across EBITDA and working capital. This wasn’t about finding theoretical opportunities. It was about identifying specific, executable levers with quantified economic impact. The operational assessment revealed significant value creation opportunities that hadn’t been factored into the investment thesis:

• Division integration opportunities: The business partially operated independently across locations. We identified opportunities to integrate operations, consolidate purchasing, and eliminate headcount (SG&A) redundancies.
• Machine shop-floor lean improvements: Production processes had opportunities to reduce waste, improve cycle times, and optimize throughput. These weren’t radical transformations, they were disciplined approaches in applying lean manufacturing principles.
• Facility consolidation: Analysis revealed that one facility could be closed and operations consolidated, reducing fixed costs while maintaining production capacity and customer service levels.
• Centralized sourcing: Purchasing was decentralized across locations. Consolidating spending with fewer suppliers would deliver material cost reductions and improved payment terms.
• SKU rationalization and pricing: The product portfolio included low-margin SKUs that consumed disproportionate operational resources. Rationalizing the portfolio and improving pricing discipline would expand margins.
  

These weren’t aspirational goals. We quantified each opportunity, identified the resources required to capture it, and built implementation timelines into the value creation roadmap. We assessed the leadership team, operational governance, and company culture to identify likelihood to capture the identified savings.

What We Found: 5% Working Capital Upside

Beyond EBITDA improvements, we identified significant working capital optimization opportunities. These improvements would free up cash to fund growth initiatives and reduce the capital intensity of scaling the business, as well as free up inventory storage space.

• Inventory optimization: Safety stock levels were set conservatively without data-driven analysis. Using statistical models, we assessed optimal inventory levels and developed projected inventory burn-down plans. Improved demand forecasting and supplier lead time management could reduce inventory levels by 15-20% without increasing stockout risk.
• Account receivable improvements: Collection processes were inconsistent across locations. Standardizing payment terms, improving invoicing speed, and implementing disciplined collections would accelerate cash conversion.
• Supplier payment term optimization: Negotiating extended payment terms with key suppliers would improve cash flow without damaging supplier relationships.

The Outcome: An Executable Value Creation Roadmap

We delivered a comprehensive operations and IT assessment that gave the PE firm clarity on three critical questions:

1. What can this business do today? We validated current operational capabilities and constraints including operational capabilities, maturity, and leadership.
2. What will it take to execute the growth plan? We identified the investments, timeline, and risks associated with scaling including production capacity and equipment CAPEX.
3. Where are the value creation opportunities? We quantified specific EBITDA and working-capital levers and developed implementation roadmaps in manufacturing, supply chain, footprint, and integration.

As a result, the deal closed with an operational value creation plan built into the investment thesis. The firm knew exactly what operational improvements to pursue, what resources they required, and what returns to expect. This is the difference between diligence

Why This Approach Works

This engagement demonstrates how operational due diligence creates value when it goes beyond risk validation to opportunity identification.

Test Assumptions Against Operational Reality

Financial models make assumptions about growth, margins, and capital requirements. Operational diligence tests whether those assumptions are executable given current capabilities, systems, and constraints.

In this case, the growth plan was achievable, but it required specific operational investments and sequencing that weren’t in the original model.

We not only identified value creation opportunities but assessed manufacturing capacity and the organizational capability to achieve the savings through interviews and site observations.

Quantify Opportunities Before Close

Value creation shouldn’t start after close or on day 100. It should start during diligence when you can still negotiate deal terms, adjust the investment thesis, and build executable roadmaps.

Identifying 8% EBITDA improvement during diligence meant the PE firm could underwrite those returns with confidence and start execution immediately post-close.

Identify Risks While You Can Still Act on Them

The operational risks we identified (knowledge concentration, IT infrastructure, supply chain scalability) weren’t deal-breakers, but they required specific investments and timelines.

Finding them during diligence allowed the firm to factor mitigation costs into the purchase price and build remediation into the 100-day plan.

Finding them six months post-close would have meant scrambling to fix problems while trying to execute the growth plan.

The same principle applies when preparing a business for exit. A proactive sell-side readiness assessment can identify operational gaps before buyers do, strengthen support for credible EBITDA opportunities, and reduce friction during diligence.

The Broader Pattern

This manufacturing case study reflects patterns we see across industries and deal sizes. According to the National Center for the Middle Market’s 2025 Private Equity Report, PE-backed businesses report greater year-over-year revenue, employment, and EBITDA growth than non-PE-backed companies. This advantage often stems from the operational rigor applied during diligence and the first 100 days.

Operational performance determines outcomes. Firms that embed operational diligence into every deal capture that value.

Ready to Test Your Investment Thesis and Identify Cost Upside?

This case study is one example from TriVista’s 4,000+ projects since 2006. We conduct Quality of Operations™ and IT due diligence across manufacturing, distribution, services, and technology businesses.

We help PE firms answer the questions that financial diligence can’t: Can this business execute the plan? Where are the operational risks? What value creation opportunities exist?

If you’re evaluating a deal and want operational clarity before close, let’s talk.

Read the full case study: Quality of Operations™ and IT Assessments Find 8% EBITDA Improvement and 5% Working Capital Improvement