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Financial restructuring for industrial supply distributor

May 31, 2017 Case Study 1 min read
Supplier stabilized relationship with bank lender and returns to profit following restructuring.

 Image of people meeting

The client

  • A $90 million industrial supply distributor

The challenge

  • Emphasized growth over profitability and working capital management
  • Lost money for three consecutive years; in default on bank covenants
  • Longtime bank relationship deteriorating
  • Suppliers holding shipments due to late payments

The solution

  • Immediately focused attention on collections to improve cash position
  • Kept bank involved and informed of plans, activities, and progress
  • Measured sales performance leading to elimination of low-production salespeople
  • Reduced administrative and overhead personnel
  • Analyzed profit by customer and product; created new pricing strategy and shifted cost of certain personnel to customers

The benefit

  • Reduced ineligible AR by $2 million
  • Bank relationship stabilized during restructuring period
  • Consistently profitable each month once cost reductions completed
  • Obtained new financing on very favorable terms; previous lender paid in full

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