Out of Court Liquidation / Turn Around

A North American Distributor, which had experienced rapid growth, had run out of cash and recorded its first loss in its 32-year history.

Issues:

  • Cash Flow was critical.
  • The business was failing rapidly.
  • The lending institution was calling in the loan.
  • A/R DSO had climbed to 65 days.
  • Inventory DOH had climbed to 70 days.
  • Operating expenses were 95% fixed.
  • 250 of over 2,000 SKU’s comprised 85% of its sales.
  • A customer segmentation analysis showed 90% of its revenue came from 10% of its customers.

Actions Taken:

  • A complete assessment of the organization was completed.
  • A complete turn-around plan was implemented.
  • Existing personnel were upgraded.
  • A telemarketing sales initiative was launched.
  • The revolving credit facility was negotiated with a new lending institution.
  • Leases were terminated, facilities were sold, and warehouses were consolidated.
  • A business that was not part of the core competency of the business was divested.

Results:

  • Expenses were reduced by 45%.
  • Headcount was reduced by 50%.
  • DSO was reduced by 17 days.
  • DOH was reduced by 25 days.
  • Debt levels were reduced by 70%.
  • $20 Million of free cash flow was produced.
  • The balance sheet was restructured and the company was positioned to sell.
  • Shareholder value was maximized by the sale of the company.

Check out our Out of Court Liquidation Services.