A rugged strategy and value improvement project
BOH, established in 1998 and based in Fort Worth, TX, manufactures and distributes durable shipping containers with secure interior storage units. The shipping containers are used for moving/storing various parts, tools and equipment during military deployments around the globe. BOH containers are shipped via ground, sea or air and enable military units to deploy on short notice and be up and operational quickly.
BOH is well-respected and its rugged, mobile, customizable storage systems are considered essential for Army installations all around the world. However, as the future of war shifts, BOH wanted to ensure it would grow and develop products to meet future military needs.
Having worked with its investment firm, Anchor Partners, on a previous project, Maven was engaged to help assess organic growth and potential acquisitions. The Maven team was able to hit the ground running based on its past experience with this company and industry.
As BOH looked forward, it saw growth opportunities, but wanted to better understand how different growth opportunities would impact its future valuation. Through one-on-one interviews with industry experts, bankers, brokers, PE firms and future buyers, Maven was able to identify various levers (end markets, customer concentration, EBITDA margins, etc.) that would impact the future valuation. Understanding the details of each “valuation lever” enabled BOH to adjust its strategy and to focus on activities that would benefit it in the long term. (Read more about how Maven approaches Valuation Projects.)
There are few situations in business that are new, and there is tremendous value in evaluating various competitors strategies. Companies can benefit from understanding the hard learned lessons that led to different companies successes. With this in mind, Maven reviewed the several competitors in the military supply space to determine elements that made them each successful as well as reviewing their strategies. The lessons learned during this research informed later recommendations, but first it was important to understand the future of warfare, in general.
The future of warfare
BOH’s core product feeds perfectly into the Army’s current operations. Large base installations in the desert delivered by sea on Navy vessels. Through secondary research and validated with expert interviews with former Generals, Maven identified several expected shifts in future warfare. While there would be changes, one thing would remain constant – equipment (tanks, planes, drones, etc) would need to be maintained in the field. And BOH’s core product would be in demand, though in formats different than today. It was important for BOH products to adapt to this change to meet future military needs.
Based on its findings, Maven recommended a growth strategy approach that combined organic and acquisition targets. Organic growth opportunities included product features important in new combat situations as well as business development in other branches of the military such as the Air Force. Additionally, acquisition targets were determined based on a list of criteria and a short list was provided to the team for further discussions.
The three phases of this project helped craft a go forward strategy for BOH. By understanding what will drive future valuations, how similar companies had succeeded and failed and where the market is headed, the Maven team was able to help the management team chart a course for future success. With the new strategy in place, BOH will be in the right place at the right time with the right product.
The largest wine producer and distributor of 100s of brands in Canada
In late 2016, OTPP acquired the Canadian business of Constellation Brands (now Arterra Wine Canada), the largest wine producer and distributor of 100s of brands in Canada including Jackson-Triggs, Inniskillin, Robert Mondavi and Kim Crawford.
Ontario Teachers’ Pension Plan (OTPP) is an independent organization responsible for managing the pensions for teachers in the province of Ontario. OTPP is one of the world’s largest institutional investors with net assets at ~$194Bn as of June 30th, 2018. The fund is home to one of the world’s largest pools of Private Capital, actively seeking opportunities for partnership and investments in companies looking to grow. Private Capital accounts for ~$32Bn in net investments with capital deployed through direct / co-investments and funds. In late 2016 OTPP, OTPP acquired the Canadian business of Constellation Brands (now Arterra Wine Canada), the largest wine producer and distributor of 100s of brands in Canada including Jackson-Triggs, Inniskillin, Robert Mondavi and Kim Crawford.
Gregg Meheriuk (Senior Principal, the Private Capital Group) engaged Arterra to develop a Value Creation Plan (VCP) that identified the key levers to drive growth in the business in excess of the original investment thesis. Unlike many private equity firms, OTPP leverages a ‘Playbook’ early in an investment that aligns the Board of Directors on key questions to assess in the VCP. It then engages with the company to develop a detailed plan underpinning the investment.
Given that OTPP has approximately 50 companies in the Private Capital Group, Mr. Meheriuk leverages outside advisors to help develop the VCPs. After evaluating several consulting firms, from larger well-known consulting firms to boutique shops, the management team and Mr. Meheriuk selected Maven Associates to co-develop the VCP. They felt that Maven could deliver a high quality team of former Tier 1 consultants, utilize a more collaborative approach, and engage with the management team more effectively while remaining cost effective.
Over a six-month period, the Arterra management team, Maven and Mr. Meheriuk developed a VCP that helped identify several significant opportunities to drive EBTIDA that exceeded the initial investment thesis. These drivers included pricing and promotion, new product development, operations and gaining operating leverage with the SG&A. Additionally, upon completion of the VCP, OTPP, along with management, operationalized the VCP by creating a robust project management process to ensure it captured the identified value.
A year later, OTPP continues to leverage the VCP to ensure Arterra Wines Canada achieves the value identified.