CPG Case Study–Traditional Transaction

May 15, 2017 by sherwood 0 comments

Situation

A leading Lawn and Garden client had $2 million in excess inventory due toa packaging change and a planned re-launch of the brand.They needed to sell the inventory quickly to eliminate the potential of old packaging competing with new packaging.Since the selling season was over, the liquidation marketwas offering $400K-$500K, far less than their value.
Solution
Sherwood agreed to purchase the inventory for $2million in trade credits. The trade credits were then used to pay for a significant portion of the client’s advertising, marketing, freight and logistics costs, all purchased at the client’s existing pricing and commercial terms.The inventory was resold to preapproved locations within 3 months, assuring that the client’s selling strategies were not compromised.

Result
The client utilized all trade credits within 12 months, reducing planned out-of-pocket expenses by $2MM.Instead of accepting the financial loss associated with traditional cash liquidation, the client was able to book a sale at a much higher amount approved by their auditors.The client received 4 times the liquidation value because of this transaction.