Creating Cash Out of Excess Working Capital
Pulver Systems, Chicago Illinois
Manufacturer of material handling equipment for commercial bakeries. $20 million in annual sale. $3 million bank debt.
- Second generation Family Business with weak Financial and manufacturing management.
- Multi-year sales growth with addition of international customer, but international sales volume faded and associated SG&A costs did not.
- Several larger jobs had lost money.
- Customer collection practices poor.
- Bank lender 30% over-advanced on collateral value.
- Business not saleable in its weak condition.
- Owner had personal guarantee and liquidation represented a sure loss for the lender.
- MorrisAnderson engaged as CRO to provide Assessment and create Turnaround Plan.
- Company downsized, inserted new controls on bidding and job management, collected AR hard, reduced plant WIP inventory to generate cash.
- Discovered manufacturing management involved in theft and fired top 3 managers and re-staffed management.
- Negotiated with major suppliers to keep raw materials flowing.
- Company EBITDA improved from $(1) million to $1.5 million annually.
- Refinanced company to a new lender.