Turnaround of a Graphic Arts Business

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Challenge


  • Designs high-end advertising graphics and produces various high-quality graphics for consumer products companies and advertising agencies.
  • Company was losing money because volume was down severely due to cutbacks in discretionary advertising, yet the company’s cost structure had remained constant.
  • Company was saddled with $3 million in debt, cash was short and as a result, multiple creditors were threatening to stop providing goods and services, and several equipment lessors were threatening repossession on their collateral due to non-payment on their leases.

Solution

  • A turnaround plan was developed to downsize the company and to manage the tight liquidity situation.
  • CFO was replaced as he was incapable of managing cash and vendors in this situation; one of our financial experts assumed the interim CFO position.
  • Worked with the CEO/owner to resize the company for the current sales volume and laid-off employees and moved out rental space that we no longer needed.
  • Led negotiations with the secured lender and several equipment lessors to restructure deals that worked within the 13-week cash budget we had constructed and verified.
  • Led efforts to expedite the collection of receivables, the faster completion of customer in-process jobs to improve cash flow.
  • Worked with the sales management to set order targets that assured the company a minimum of a breakeven sales volume but higher price levels.

Results

  • Thanks to cooperation from many parties and a belief in the reasonableness of our business and cash plans, the company began generating positive cash flow and achieving its plan.
  • The lender was feeling secure in its collateral again by the time a permanent CFO was hired.

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