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We employ sophisticated approaches to value creation based upon two premises: fish where the fish are and use every available tool to catch them. The value creation capacity of a company can be depicted by the average revenue profile for the packaged goods industry:
Cost of goods sold 57%
S,G&A 29%
Interest expense 1%
Income taxes 4%
Net Income 9%
New product introductions, brand development and information systems installation are all high risk with extended payback periods, normally beyond the timeframe in which
we seek to create value and secure returns for our investors. Supply chains hold the key to value creation followed by overhead spending. Interest expense as impacted by financial engineering is typically less than 1% of Net Sales at most corporations. Randol Capital Partners, LLC is an expert at implementing enterprise-wide and supply chain cost savings. We have found the greatest value creation opportunities to be:
- Better matching available manufacturing capacity to current demand
- Systematically boosting plant efficiencies, often by 50%
- Eradicating yield losses in the conversion process
- Strategically targeting capex minus the typical 40% gold plating
- Sharing services among supply chain facilities
- Simplifying the distribution network to improve service and lower costs
Our forte is lowering the overhead costs structure of companies without impairing effectiveness and growth prospects. We structure companies to emphasize entrepreneurship over centralization. We employ a value added and activity-based approach to reducing S,G&A expenses, usually by an average of 20% beyond existing levels. We work in conjunction with management to convert tangible insights into implementation strategies that have sustained positive impact on value creation.
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