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Resizing Farm Equipment Manufacturer Leads to Refinancing

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

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Home·Resizing Farm Equipment Manufacturer Leads to Refinancing

The Situation

Manufacturer of Rotary Mowers and Farm Equipment with revenues of approximately $50 million. $16 million debt.

  • Projected cost savings did not materialize, as the recession led to a decline in revenue and profitability.
  • In addition, ownership and control issues further strained liquidity.
  • The company had lost almost 20% of its revenue due to the Great Recession and a key customer's revenue decline.
  • Margins at lower revenue levels could not support fixed operating and manufacturing costs.
  • Cost-cutting efforts fell short of achieving profitable operations.
  • The company faced a significant crossroads as it was also engaged in an ownership struggle between father and son.
  • The bank was pressuring the company to find a new lender.

How We Advised

Our experts quickly analyzed the macro, micro, and the company’s situation to conclude that:

  • While the company initially reacted slowly to the economic downturn, it had since appropriately right-sized operations and a sound business model.
  • The company had a focused sales effort and product strategy that was strategically sound and should yield strong results.
  • We reviewed the company forecast assumptions for reasonableness – flowed them through an integrated model, which showed that cash flow and availability would be sufficient to fund operations and service bank debt.
  • We worked with senior management to resolve ownership issues and formalize management succession plans, which were critical to business continuity.
  • Our validation of the business plan and cash projections gave the lender comfort to allow the company adequate time to seek refinancing.
  • The company was able to refinance its existing debt, and the lender was paid in full.

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. 

Key Contact

For additional information about the engagement or to learn more about our services, contact:

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