The Challenge
This family-owned business has been operated successfully for decades. Recently it faced financial challenges due to the loss of a large customer after industry consolidation. One of our partners was introduced by its banker to the company CEO to help execute a turnaround strategy.
The Solution
In this case both revenue recovery to prior levels (over time) and (rapid) cost reduction in step with near-term revenues was essential. Tight cash controls and expense reductions were established while sales and revenue initiatives were developed and implemented.
The Implementation
Our partner quickly got up to speed and became an acting member of the executive team. Initial steps including a 13-week cash forecast, monthly profitability forecasting and scenario analysis were rapidly implemented. Financial reporting was enhanced to allow clearer analysis of results. As turnaround steps were developed, our partner was a critical “seat at the table” with company management and helped establish goals and track the extent of their achievement. It soon became clear that while a turnaround was very achievable, the bank would not be willing to give the company sufficient time for its implementation. Therefore, replacement of the company’s lending relationship became a top priority.
The Results
Our partner helped his client identify new lender candidates and structure and close loans that replaced the prior lender’s capital. Successful implementation of the turnaround plan allowed the company to return to profitability in 2020. With COVID-19 hitting in March, our partner helped the company obtain greater support from its new lender and via the Payment Protection Program.