Target is a leading brand of plant-based snacks, functional ingredients, and gourmet seasonings. It sells its products through 9,000+ stores across the US. Sourcing its materials from a network of international supplies, Target transforms these ingredients into finished packaged goods at its sole facility in California.

A leading private equity firm dedicated to the food and consumer products industry was seeking an acquisition in the 'better-for-you' food segment to complement its current capabilities in the freeze-dried food segment.

The private equity firm engaged FDP to provide pre-acquisition due diligence, excluding tax due diligence analyses, related to Target and prepare a pre-acquisition report focused on the quality of earnings, timing, and risks related to cash flows, quality of assets, and identification and quantification of potential financial risks and exposure.

FDP reviewed the financial information provided in Target's data room. Upon reviewing several critical areas, FDP identified significant financial concerns regarding trade receivables, inventory, and the adequacy of trade program accruals. Based on the cumulative effect of these concerns, FDP was not confident Targe was generating positive cash flow. FDP ceased further pre-acquisition work at the request of the private equity firm.

As a direct result of FDP's findings, the private equity firm withdrew from further pursuit in the near term to re-evaluate its investment decision in Target.

FDP's findings also allowed the private equity firm to reassess Target's proper valuation and evaluate the additional time and resources required to address its near-term accounting and finance needs.