Case Studies

Operational Turnaround Leads to Good Sale Price at Auction

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

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Home·Operational Turnaround Leads to Good Sale Price at Auction

The Situation

Interim management, investment banker, and financial advisor. $70 million in revenues. $20 million debt. Color cosmetics manufacturer, wood case eye pencils. Key customers: P&G, Avon, L’Oréal, Estée Lauder. Private Equity ownership.

  • Failed expansion into direct retail business, combined with recession, reduced revenues 35% to $45 million and created losses.
  • Excess inventory approached 50%, margins neared 6%, and 37% of products were sold at a loss.
  • Senior secured lender over-advanced $3.7 million.
  • Liquidation analysis showed potentially impaired $10 million on a $19.8 million note.
  • The private equity sponsor is winding down and is unable to fund additional losses.

How We Advised

Our experts engaged by the Company as CRO and Interim CEO to manage the turnaround process and sell the company.

  • We worked quickly with senior management to implement cost savings opportunities.
  • Reduced workforce by 284, implemented salary reductions of 10-25%.
  • Increased pricing on 65% of the line, improving the margin to 21.6%.
  • Eliminated non-strategic assets in China and Oxnard, CA.
  • Negotiated terms with vendors and a forbearance agreement with the lender.
  • EBITDA improved from negative $1.0 million to positive $2.1 million.
  • Revenue stabilized at $42 million, while forecasted full-year EBITDA was $5.5 million.
  • 54 NDAs signed by potential buyers, with five getting to due diligence.
  • Three bidders were present at the §363 auction, which pushed the final price 27.7% over the stalking horse bid.
  • The Company was sold for $16.6 million.
  • The sale closed just 78 days after a bankruptcy filing.
  • Senior lender improved recovery by $7.5 million.
  • 400 jobs saved.

Key Contact

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

Related Practice Areas

> Chief Restructuring Officer (CRO) and Interim Management Services 
Our experienced C-suite interim executives advise and support companies in financial distress, experiencing hypergrowth, or that are challenged by critical vacancies among senior leadership. Whether the leadership void results from operating challenges, a recent officer resignation, the need for added support during busy periods, or during an extended job search for the right permanent hire, our experienced executives provide immediate relief and value. 

 

> 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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