Supplier Insolvency

A Customer-Driven Supplier Acquisition in case of Supplier Insolvency

In the event of a supplier’s insolvency or bankruptcy, a customer-driven supplier acquisition facilitated by AAAgiler refers to the process wherein AAAgiler takes over a supplier critical to a customer’s ongoing operations or strategic goals. In this scenario, the customer actively recommends a specific supplier for AAAgiler to acquire and provides financial support for the takeover.

supplier insolvency and bankruptcy
supplier insolvency and bankruptcy

Steps and Aspects of a Customer-Driven Supplier Acquisition by AAAgiler

Identification of the Critical Supplier

The customer identifies a supplier whose products or services are essential for smooth operations and who is facing financial difficulties that have led or could soon lead to insolvency.

Supply Chain Disruption

A threat to supply chain continuity caused by a potential supplier insolvency or product quality prompts the customer to take action to ensure the supplier’s operations continue uninterrupted.

Recommendation and Support

The customer recommends AAAgiler to acquire the critical or strategic supplier and actively supports this process, such as through higher prices with long-term purchase commitments and providing acquisition financing to a special purpose vehicle (SPV).

AAAgiler as the Acquirer

AAAgiler takes an active role as the potential acquirer of the supplier.

Due Diligence and Financing Plan

AAAgiler conducts an expedited due diligence to identify major risks associated with the acquisition. A business plan and financing concept are developed to ensure a successful takeover.

Negotiations and Closing

Negotiations with the supplier or the insolvency administrator are conducted, and the acquisition is finalized in consultation with the customer, with a focus on ensuring the continuity and quality of critical or strategic supplies. The customer provides financing to an AAAgiler SPV.

Integration and Continuation of Operations

Post-acquisition, the top management at the supplier is replaced, and the supplier is integrated into AAAgiler’s existing structures and locations. The supplier continues its operations with a focus on fulfilling the customer-driven business requirements. Over time, operational processes are improved, and profitable new business is acquired.

Customer Relationship and Satisfaction

The goal of the acquisition is to ensure timely delivery of quality products, with the supplier becoming profitable again without requiring special support from the customer.

Why Should an (OEM) Customer Use Our Service in Case of Supplier Insolvency?

We ensure the continuity of your supply chain and help you avoid the detrimental effects of a supplier’s insolvency or bankruptcy! An (OEM) customer might use AAAgiler’s customer-driven supplier acquisition service for several reasons:

Ensuring Supply Chain Continuity

By having AAAgiler acquire a critical or strategic supplier, the OEM customer can ensure the continuity of their supply chain and minimize the risk of supply disruptions.

Off-Balance Sheet Restructuring

Restructuring measures are conducted „off-balance sheet“ for the customer. The supplier typically has poor profit margins or a low return on investment (ROI), which does not impact the customer’s consolidated financial statements. Additionally, the supplier does not need to be intricately integrated into the customer’s reporting structures.

Efficiency Gains and Cost Reductions

Integrating the supplier into AAAgiler’s structures can lead to efficiency gains and cost reductions through improved processes.

Risk Mitigation and Reputation Protection

The customer limits their maximum risk to the provided financing and remains publicly unnamed (reputation protection).

Flexibility and Responsiveness

AAAgiler can respond flexibly to unforeseen challenges or changes in the industry.

Continued Independence of the Supplier

The supplier can continue to serve direct competitors. By outsourcing the supplier acquisition to AAAgiler, the OEM customer can focus on their core competencies and strategic activities.

Cost-Effective Structure of a Mid-Sized Company

A more cost-effective mid-sized company structure compared to a large corporation, allowing for quick decisions without complicated coordination with corporate structures.

In conclusion, a customer-driven supplier acquisition by AAAgiler ensures supply chain stability, minimizes financial risks for the customer, and allows the supplier to continue operations under improved management and processes. This approach provides a strategic advantage for the OEM customer by maintaining critical supply lines and focusing on core business activities while leveraging AAAgiler’s expertise and resources.