Case Studies
Stay in the Game
For a mid-sized manufacturer of baseball gloves and bats facing a severe cash shortage, lack of borrowing capacity, bloated cost structure and a polarized ownership and management structure were the obstacles.
Initial Challenge:
- Revenue was growing at 20% per year with significant operating losses and cash shortages causing ownership to lose confidence in the business plan.
Services Provided:
- Turnaround and restructuring consulting
- Interim management
Key Actions:
- Conduct a two week deep-dive diagnostic period to identify underlying problems, and devise corrective actions and investment requirements
- Insert interim corporate controller to take immediate control of cash, AR, AP, and the bank line of credit
- Identify $1.4 million in cost reductions and implement reductions of $690,000 in 45 day period
- Restructure manufacturing joint ventures to align ownership interests and reduce costs and funding requirements
- Establish consensus plan of action among key stakeholders: ownership groups, bank, management, and joint ventures
CHOATE & Associates' Results:
- Achieved operating P&L break-even run rate in 45 days
- Regained confidence of bank, management, and joint venture partners
- Built sales and manufacturing plan to restore longer term health
Navigating a Sea Change
A mid-sized global manufacturer of marine steering systems and pumps buffeted by rising raw material costs, and antiquated go-to-market strategies, saw a 35% drop in world-wide demand.
Initial Challenge:
- Revenue was flat and profits were eroding in a world-wide market shrinking 10% per year.
Services Provided:
- Turnaround and restructuring consulting
- Financial advisory
Key Actions:
- Reduce costs by streamlining business, including closing unprofitable European distributor
- Balance revenue with diversification in new segments and re-entry into Europe and other international markets with blend of direct/distributor sales model
- Insert professional operations manager to overhaul all business processes
- Develop a survival plan as revenue plummeted
- Maintain profitability with focus on pricing, inventory management, and SG&A control
CHOATE & Associates' Results:
- Revenue flat in a shrinking and shifting market
- Profitability maintained despite volatile raw material costs and intense international competition
- "Will to succeed" renewed with new management and key staff, new roles for owners, and company motivated by spirit of innovation
- Company restructured to survive recession and prosper in the future
Creative Financing
An international importer of perishable commodities was experiencing severe liquidity problems.
Initial Challenges:
- Restructure financing of working capital
- Structure repayment of debt to major supplier
- Operate at a profit
- Structure strategic plan for growth with foreign investors
Services Provided:
- Turnaround consulting
- Financial advisory
- Interim management
Key Actions:
- Devise action plan to extend working capital financing during Q4, 2008
- Negotiate with international suppliers alongside owner
- Advise owner on industry-wide role during regulatory crisis
- Develop plan to restore company to profitability
CHOATE & Associates' Results:
- Working Capital Financing agreement put in place for 2009
- $1 million payable to supplier restructured over 3 years at no interest
- New company structure presented to strategic investors to grow business by 100% over 5 years
- Cost reduction program initiated to attain profitability
Slow and Steady Wins the Race
A regional systems integrator of hardware, software, and services was experiencing a sudden 50% revenue reduction.
Initial Challenges:
- Rapid drop in revenue due loss of major customers with burst of Internet bubble
- Rapid commoditization of core products
- Loss of corporate momentum and focus
Services Provided:
- Corporate restructuring
- Interim management
Key Actions:
- Restructure product portfolio to offer fewer, higher margin and growth products from limited number of core partners that present value-adding service opportunities
- Develop geographic expansion plan
- Change senior management into a professional management team and establish a culture of accountability and data-driven decision making
- Manage high-growth professional services business
CHOATE & Associates' Results:
- Revenue and operating income doubled
- Annual growth rate accelerated to 20%
- Major new professional services growth platform
Change the Prognosis
An importer and distributor of commodities loses customer accounting for over 75% of revenue:
Initial Challenges:
- Rapid revenue loss
- Survival of company in question
- No plan to turnaround company
Services Provided:
- Refocus company on international import business
- Hands-on supply, logistics, and sales development
Key Actions:
- Refocus company on international import business by leveraging contacts and industry experience
- Cut costs by reducing overhead
- Develop financing plans
- Initiate and implement niche business opportunities
- Manage supply, logistics and sales functions
CHOATE & Associates' Results:
- Company profitable within 2 years on reduced cost structure
- Stable, year round programs to supplement seasonal businesses
- Operations and administrative processes streamlined
- Related niche business established
Successful Exit
A $10 million manufacturer and distributor of paint applicators struggling with increased competition and customer demands.
Initial Challenges:
- Revenue flat and profits eroding
- Large chain store customers demanding more financial and operational support
- Availability of working capital exhausted
Services Provided:
- Interim management (responsible for all operational aspects of manufacturing, marketing and finance.)
Key Actions:
- Implement MRP System which including JIT Manufacturing Module and complete financial and cost accounting-budgeting system
- Coordinate the acquisitions and relocations of two strategic competitors to diversify the customer base and decrease dependence any major customer or market
- Launch a new marketing and sales program
CHOATE & Associates' Results:
- Revenue growth and return to profitability
- Manufacturing, distribution, sales and marketing processes elevated to "best in class".
- Strategic positioning of a market leader and attractive acquisition candidate
- Company sold to strategic buyer
Leveraging the Opportunity
A $20 million manufacturer and distributor of "Packaging for Perishables" serving the food, biotech, and industrial sectors throughout the United States, Canada and European markets, stabilizes the company and stimulated growth.
Initial Challenges:
- Lack of succession plan due to CEO health issues
- Failing lending institution causing cash availability concerns
- Financial and operational reporting undeveloped
Services Provided:
- Interim management (CFO/Successor CEO)
Key Actions:
- Design and successfully implement a new strategy
- Install new senior and middle management team
- Work with the current lender, prospective lenders, and investors to restructure the company debt, establishing new long and short-term financing and equity investments
- Lead multiple mergers and acquisitions to consistently achieve double-digit sales growth
- Oversee the design and construction of three state-of-the-art manufacturing facilities in 2 countries
- Design and implement a complete MRP system to enable accurate financial and operational reporting
CHOATE & Associates' Results:
- Stabilization of the immediate and future management and financial concerns
- Over 300% profitable revenue growth
- Strategic positioning of the company for future transaction
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