In 2021, B&C Group acquired an 80% stake in the packaging company Schur Flexibles. The prior year, Schur had reported EBITDA in excess of 90 million euros. But less than a year after taking over, B&C claimed it had discovered that this number “was a mirage.”
It’s an acquiring firm’s worst nightmare:
Under the US buyout firm, Schur had allegedly booked certain bonus payments, excessive consulting contracts and a slew of expenditures for testing, maintaining and even relocating machinery, which were “capitalized” as assets to be written down over time. On top of it all, certain losses were presented as the result of discontinued operations, according to court filings and findings from auditors brought in by the company.
When 2020 EBITDA was restated, Shur slashed it by 66%. And accountants at KPMG recommended even larger cuts for the prior two years.
The Bloomberg article goes on to report that in disputing these allegations, American private equity firm Lindsay Goldberg, a prior owner which kept a 20% stake after the B&C acquisition, pointed to B&C’s “extensive due diligence” prior to purchase, claiming that B&C understood the accounting that had been done and knew what they were getting.
Apparently not, at least in B&C’s telling. Sometimes due diligence just isn’t enough. And since reporting the EBITDA irregularities, B&C has had to turn over control of the packaging company to a group of Schur’s creditors.