Turnaround Salvages Value for Owners

Hobie Cat

San Diego, California

Challenge

Kayak and watersports manufacturer with two international operations. $60 million in annual sales. $24 million in bank debt. $16 million in subordinated owner’s debt.


  • Dissent between two ownership groups and consecutive years of losses resulted in a lender loan exit decision.
  • Weak financial reporting and accounting controls.
  • High-cost manufacturing operations.
  • Governance dispute between two ownership groups.
  • Company had been previously marketed for sale which resulted in low ball offer from only one bidder.

Solution

  • MorrisAnderson appointed as independent director and chairman of the board as well as financial advisor, and investment banker.
  • Developed profit improvement plan expected to achieve an estimated $7 million of annual EBITDA improvement including: price increases, RIFs, strategic outsourcing, re-sourcing of Chinese vendors, new product launches, sales channel expansion including launch of E-commerce platform.
  • Cleaned up years of sloppy accounting, inventory valuation, and financial reporting.
  • Initiated sale process marketing the Company to over 100 strategic and financial buyers.

Results

  • Financial results improved from $200K monthly loss to $300K monthly profit. Borrowing availability increased by $3 million through reduced inventory and accounts receivable levels.
  • Successful marketing resulted in 5 LOIs for purchase of the Company.
  • Auction process successfully generated a final buyer which fully paid all debt and liabilities and a $15 million value increase from prior purchase offer.

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

Brian Schroeder

Brian Schroeder, CFA, CPA, is a Director at MorrisAnderson. Brian brings an extensive background in the restructuring, finance, accounting, private equity, and wealth management industries and uses that background as a basis to structure practical solutions through comprehensive financial analysis. Prior to joining MorrisAnderson, Brian was a private wealth analyst for BMO Private Bank, an Read More

Luke Stephenson

Luke Stephenson, is an Associate Director at MorrisAnderson. Luke brings an extensive background in advisory, financial analysis, valuation, and due diligence services across multiple industries. Luke uses that background as a basis to structure practical solutions through comprehensive financial analysis. Prior to joining MorrisAnderson, Luke was a Senior Associate for PwC, the world’s largest professional Read More