Case Studies

Cost Reductions Allow Recapitalization

J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida

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Home·Cost Reductions Allow Recapitalization

The Situation

Custom cabinet manufacturer. Sales of $14 million. Bank Debt of $5 million. 170 employees. Serving new home construction and remodeling.

  • Company was acquired near peak of home-building market.
  • New owner/manager, a father and son team, did not have meaningful industry experience.
  • As the housing market began a dramatic decline, revenues fell from $20 million to below $14 million.
  • Highly-leverage balance sheet soon became over-leveraged, management was not effecting change in cost structure.
  • The company began defaulting on senior debt covenants.

How We Advised

  • We were hired as Financial Advisor and provided an initial assessment that delivered the “facts” to the lenders, including a rolling 13- and 52-week cash forecasts and a recommended work plan.
  • Executed the work plan to reduce fixed costs, optimize working capital, and implement a reporting process.
  • Solicited prospective sources for re-financing and worked closely with sub-debt lender for solutions.
  • Reduced fixed cost structure and working capital, re-aligned organizational duties and management responsibilities.
  • Increased cash conversion cycle by reducing inventory and working closely with customers and vendors.
  • Further decline in the industry and economy resulted in continued challenges with (a) financial performance and (b) refinancing.
  • Due to implementation of work plan, combined with reliance on the reporting implemented by J.S. Held, the senior lender continued to forbear.
  • Ultimately the company was able to recapitalize with its sub-debt lender executing warrants which initiated a change in ownership and allowed a recommended change in management to occur.

Key Contact

Dan F. Dooley, CTP
Senior Managing Director
Strategic Advisory Practice
+1 603 660 8952
[email protected]

Related Practice Areas

> Debt Restructuring Services
When a company is in financial distress, our Strategic Advisory experts design and implement debt restructuring and refinancing strategies tailored to the company’s unique circumstances. We help middle-market businesses stabilize operations, improve liquidity, and optimize their capital structures.

 

> Turnaround and Restructuring Services
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation.

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