MorrisAnderson Fixing Operational Issues Leads to Going Concern Sale

Business ServicesLitigation SupportPerformance ImprovementTurnarounds & Restructuring

25M

Annual Sales

39M

in Debt

CastleRock Security, Arlington Heights Illinois

Challenge

National residential alarm monitoring and servicing company with $2 million of recurring monthly revenue from 50,000 customers ($25 million annually). $39 million debt.

  • Technological obsolescence exposed company to tremendous risk of life/security liability
  • Account base suffering tremendous attrition due to customer dissatisfaction arising from onerous contracts, poor customer and field service and general economic conditions, leading to increasing diseconomies of scale
  • Highly regulated/licensed industry that required 365/7/24 operations
  • Enterprise value entirely dependent on maintaining and servicing existing contract portfolio
  • Shutting operations would result in total loss of enterprise and account value

Solution

  • MorrisAnderson hired as interim management and assumed day-to-day control of operations to ensure uninterrupted account servicing and to develop a comprehensive analysis and remediation plan to address portfolio problems
  • Operated the company to prevent collapse and provide time for transition of account portfolio to a stable platform
  • Stabilized operations and provided complete and accurate situation analysis to lenders and other stakeholders
  • Identified barriers to sale or transition of accounts and remedy fixable problems
  • Reduced operating costs to minimize cash burn; assumed full control over all treasury operations
  • Guided company through a controlled transfer of operations with no significant interruption to account servicing
  • Reduced risk profile by transferring non-core account servicing to other parties and selectively upgrading critical infrastructure components
  • Ran comprehensive sale and outsourcing process to identify best alternative for maximizing contract value

Results

  • Successful transfer of operations to third-party servicing partner offering stable technology and fixed servicing costs
  • Increased portfolio value by $2+ million by proactively addressing non-communicating panel and other account issues
  • Eliminated high-risk failure points that threatened to put the company out of business at any single moment
  • Sold business and assisted in transition of accounts to new monitoring provider

Contributors