Selling a Business when the Industry is Rapidly Declining

Mercury Retail Services

San Antonio, Texas

Challenge

$150 million Magazine Distributor to large retailer operating in 10 states with 3 Distribution Centers. $40 million debt.


  • Magazine industry declining by 8% annually for multiple years
  • Retailers forced pricing down and converted magazines to pay-when-paid consignment inventory
  • Distributors had to pay for all magazines but only sold through 1/3 of product and got delayed credit back for 2/3
  • Company lost control on inventory accounting and grossly overstated inventory values which made detecting that operations were losing money for years hard to detect
  • Company was almost out of cash and on verge of being shutdown by its publisher suppliers

Solution

  • MorrisAnderson was appointed CRO
  • Negotiated deals with publishers to only pay for expected weekly issuance each week in cash; 1/3 of the total amount
  • Reduce costs to service and bridge company to sale
  • Marketed Company for sale

Results

  • Company was sold in 3 separate transactions
  • Remaining estate was wound down without a legal proceeding even though unsecured creditors would receive no distribution on their claims

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More

Mark J. Welch

Mark J. Welch, CPA, CTP is a Principal at MorrisAnderson based in Pittsburgh. He has over 20 years in bankruptcy and restructuring experience especially in leadership roles and fiduciary positions with clients. Prior to joining MorrisAnderson, Mark was the Director of Internal Audit at Southern Air Transport, Inc., a mid-sized cargo air-transport airline. He also… Read More