Providing vendor commercial due diligence to support the successful sale of Freshcut Foods to Flywheel Partners
Meet the client
Freshcut Foods supplies more than 300 plant-based ingredients to over 40 foodservice operators, food manufacturers and B2B clients in the UK. Established in 2003, the company employs over 320 staff across three manufacturing facilities in Nottingham, in the English east Midlands.
The high value-added plant-based ingredients supplier has benefitted from the rise in flexitarianism, where consumers are increasingly incorporating vegetables and other plant-based products into their diets for health, sustainability and financial reasons.
With a strong emphasis on becoming a trusted supplier to high-quality destination brands and top-tier B2B operators, Freshcut has successfully established itself as a reliable partner in the foodservice industry, as well as manufacturers and meal kit suppliers such as Hello Fresh. By consistently delivering exceptional service and innovation, Freshcut has earned the trust and loyalty of its customers, solidifying its reputation as a go-to provider.
Assessing Freshcut Foods' Niche Market Value
Freshcut Foods and its owners, Perwyn, required a third party to complete commercial due diligence of the business, ahead of it entering a sale process.
As an innovative market leader in a relatively niche industry, it was critical to Management and Perwyn that the strength of Freshcut’s position in the market and the value it offered to customers was fully evaluated and communicated to potential investors.
In addition, an impartial assessment of Management’s business plan, based on robust evidence and stress-testing any assumptions made, was critical.
Some of the challenges faced included:
- Accurately sizing the addressable market for Freshcut given its niche, premium positioning
- Assessing the growth prospects of a high value-added plant-based ingredients supplier, taking into account economic, societal and consumer trends
- Identifying the headroom for growth across key channels and any potential barriers
- Understanding and illustrating the unique advantage gained through Freshcut’s specialist Food Innovation capability
- Validating with customers their feedback on the service received and their continued commitment to the business and its products
STRAT7 Advisory was commissioned to complete the due diligence. Our knowledge of the sector and extensive foodservice expert network were key reasons we were chosen ahead of our competitors.
“STRAT7 were integral to successfully exiting Freshcut to Flywheel. Their rigour and flexibility in evaluating the business provided the understanding and confidence prospective bidders needed. We were impressed with how their work brought the business to life for interested parties through commercial due diligence and they worked extremely well with Management to stress test the business plan. We would happily partner with them again on due diligence work in the future.”
Investment Manager, Perwyn
How our Commercial Due Diligence Unveiled Freshcut Foods' True Potential
We undertook an exhaustive programme of research and analysis, ahead of delivering a report that anticipated and addressed the key questions potential buyers would have before investing in Freshcut. Our work included:
- Understanding and articulating the Freshcut value proposition and clearly defining the customer and competitor ecosystem in which it operates, to help audiences new to the business quickly get up to speed
- Evaluating the total and target addressable markets for Freshcut, including their dynamics and structure, size, historical performance and growth prospects, backed up by clear and compelling evidence
- Robustly evaluating how well the business serves its current customers and their attitudes towards it, including past performance and future intent
- Assessing the current strength and future longevity of Freshcut’s customer value proposition through a holistic assessment of expert, customer, market and commercial perspectives
- Providing a detailed examination of past trading performance, including customer retention, acquisition and NPD, detailing any exceptions
- Contextualising Freshcut’s performance with a detailed assessment of competitor propositions and performance
- Impartially evaluating Management’s business plan in the context of past performance and future growth prospects, identifying any areas of concern as well as potential upsides to the plan, based on our research
Our methodology included an extensive foodservice operator survey, customer reference calls, market research and modelling, trading data analysis, Management interviews and expert interviews.
Our due diligence report was shared with prospective bidders and lenders and our team subsequently held Q&A sessions with interested parties during the sales process.
Following our work, Freshcut Foods was successfully acquired by Flywheel Partners in July 2023.