Baking&Snack - October 2013 - 92

INDUSTRY INSIGHT
Jim Kline
jkline@theensolgroup.com

Performing
Due Diligence

Before breathing new life into an old facility,
be sure you’ve conducted a thorough assessment that’s free from assumptions.

Recently there have been a lot of
bakery closures, and already, some
of these bakeries are being given
a second life. And there are even
more bakeries out there waiting for
a second chance. So how do you go
about making the decision to buy
one of these idle bakeries, and what
does it take to start it up?
Fundamental to the decision to
evaluate the bakery and undertake
the assessment of the property,
building and processes is establishing your own evaluation criteria.
First, you must identify what will
be produced at the bakery, how
products will be packaged and if
the product will be handled fresh
or frozen. Next, you must project
production volumes, the work week
and crew size. Then you can forecast
warehouse, shipping, distribution
and office area requirements and
identify utility requirements.
Having established what your
needs are in terms of the building and processes, you will have
the basis you need to compare the
bakery against.

At the end of the day, the
most important thing to
remember is document,
document, document.
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/ Baking & Snack / October 2013

A good rule of thumb going into
the assessment is to assume nothing.
Current permitting of operations
and zoning can be grandfathered,
and a change in ownership can
trigger a review — or worse. One
location had restrictions placed on
hours of shipping; the bakery could
not have trucks depart between 11
p.m. and 6 a.m. Another bakery did
not meet the current industrial zoning for the site, as it was considered
a hazardous operation because of
handling flour!
Assets can be encumbered, sometimes leased; just because it is there
doesn’t mean the title is free and
clear. Part of your due diligence
should be meeting with the local
municipal officials. Learn all you
can about zoning, the site, potential restrictions, permitting requirements and processes, and anything
you can about the prior bakery’s
operations.
Document everything. Having
a drawing of the bakery will prove
a great help in recording your observations. Be sure to bring a camera with you and record where in
the bakery each photo was taken.
Having photos will help you document your assessment and will
prove invaluable when sharing what
you observed with others.
Begin with a walk-around of the

site and a look at the building exterior. What are the conditions of the
walls, windows, doors and ceilings?
Are there signs of mold, leakage,
settlement? How many grade-level
and raised docks are there? Are they
set-up for a route distribution system? How is rainwater channeled
off the roof and parking areas? Does
it appear that all drains are operational, or are there any indications
of standing water? Wetlands seem to
crop up everywhere; watch out for
them. And when considering standing water, do not forget to check on
floodplain classification for the site.
How is the paving? Is there a buffer between landscaping and the
building? Where do utilities enter
the building? Are the employee areas sized for what is needed?
As you move into the facility,
take copious notes. Is it move-in
ready? If not, what will be required?
Check lighting and ventilation systems as well as hot and cold water.
How does the building compare
to your requirements in terms of
space, features and future utilization? Confirm utility supplies such
as piping sizes and pressures as well
as ratings of pumps, electrical distribution systems, and panels and
breakers.
Go onto the roof and document
its condition, including signs of

Baking&Snack - October 2013

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