Turnaround Enables Sale Funding Owner’s Retirement

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Challenge


  • 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 off-shore 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.

Solution

  • 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.

Results

  • The company became profitable again with 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 pay out from the sale of his business.

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