Galbani
Bringing management focus to a corporate orphan
Galbani is the market-leading cheese company in Italy with a highly recognised brand. The company also has a strong presence in the cured meats market.
Identifying and securing the opportunity
Since 1992, Galbani had experienced high turnover of top management positions, including four different CEOs, and enduring several periods with no CEO at all. Despite these conditions, the company maintained a strong competitive position in a mature market with solid margins and good cash generation.
BC Partners identified an opportunity for significant value creation, recognising the resilience of Galbani’s business and the potential upside if the company was brought under focused management attention.
In 2002, leveraging the resources of its Milan and Paris offices, Funds advised by BC Partners were able to complete the acquisition of Galbani on a proprietary basis from Danone, one of the largest food companies in the world.
Selecting and supporting management
During the last phase of due diligence BC Partners selected, and worked with, a highly experienced manager who became the new CEO of the company. With the support of BC Partners, a new management team was recruited from leading consumer goods groups.
A tailored management incentive scheme was instrumental in maximizing management focus and in achieving impressive results.
Reallocating resources
During the initial phase of the investment, the focus was on reducing costs including sourcing, production, sales, distribution, as well as staff functions. These measures contributed to an increase in operating margin from 13.5% in 2001 to 19.2% in 2005. Working capital management policies were also tightened, generating a reduction in working capital absorption.
Financial resources generated through these actions were reinvested in strengthening the Galbani brands through higher marketing investments which increased from 2.5% of sales in 2001 to 4.2% in 2005.
After four years under BC Partners’ ownership, Galbani strengthened its market position, rejuvenated its product portfolio, and became a more efficient organization.
Value creation
As a result of these measures, EBITDA growth accounted for over a third of total value creation. Debt reduction from improved cash management also contributed significantly.
More importantly, repositioning the company for growth through investment in innovation and marketing made it a more attractive add-on for a specialist dairy group and justified a premium in valuation.
In 2006, the company was successfully sold to the French group, Lactalis, the leading European cheese and milk derivatives group.