Material Handling Equipment Company
Situation
Following the death of the Founder/CEO of this privately held distribution business, the company found itself being lead by a group of family members who did not have the operating expertise and financial savvy to survive. After 18 months of continuous losses, the company was in violation of their loan covenants and facing default. CP was retained to facilitate a workout of the debt and review the viability of on-going operation of the company.
Review the existing business model and organizational structure
Review and assess the income statement and cash flow
Review and analyze the balance sheet
Cosgrove Partners Action
During the engagement, CP collaborated with a broad range of suppliers, customers and management to find common ground and renegotiate the terms of each relationship to allow for the survival of the business.
Specifically, the approach focused on the following:
Negotiated payments to all major suppliers
Significant reduction in receivables and DSO
Removal of certain family members from management positions
Retention of an experienced General Manager
Sale of a small division to a competitor
Outcome
The family was able to retain control of a smaller but profitable organization while avoiding a default on their loan. Their borrowing base was retained while avoiding default.
