Case Studies

Turnaround Enables Sale of Company

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The Situation

  • This Midwestern plastic injection molder serviced the automotive and appliance marketplaces. The company had been hit by sales and margin decreases due to increased competitive pricing, especially from offshore competitors, and the resulting loss of some long-term customers.
  • Additionally, the owner/entrepreneur who had run the company for over 20 years wanted very much to retire.
  • There was $3 million in debt and an annual operating loss of almost $2 million.
  • Covenants on bank loans were not met, cash availability under existing collateral formulas had dropped to dangerous levels and changes were clearly required to stabilize and save the company.

How We Advised

  • Developed a weekly detailed cash forecasting discipline to control liquidity.
  • Planned and executed a corporate reorganization, which realigned management responsibilities and dramatically reduced headcount and costs.
  • Implemented revised pricing and marketing strategies to stop, and more importantly, reverse the top-line and gross margin erosion.
  • The company became profitable again within 90 days.
  • The secured lender regained its comfort with the security of its loan.
  • The owner who almost lost his total investment in the company retired with a multi-million dollar payout from the sale of his business.

Key Contact

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

Related Practice Areas

> Liquidity Management 
For companies in distress or undergoing rapid growth, ensuring sufficient cash flow to support operations requires a methodical approach to liquidity management marked by multi-department input, cross-constituent communication, prioritization, and negotiation. 

 

> 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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