Computer Maintenance and Software Development Company
The small company started with providing services with the advent of personal computers in the 1980's, eventually growing to $2 million in revenue, 75% going to a single multinational company. Virtually overnight its largest customer consolidated its vendor relationships to companies that could support it internationally, leading to the loss of the company's maintenance business. The company made appropriate reductions in overhead and stafffing but was unable to generate a profit.
ARP Services, LLC provided a plan to sell off the maintenance division to a synergistic buyer and used the proceeds to retire the companys debt. The remaining software development division, though dramatically smaller, was profitable.
We were retained by a specialty machine shop that had experienced rapid growth from $2 million to $5 million in two years to review its operations. The company was only marginally profitable and was not generating enough cash to fund its growth.
We provided several strategic recommendations to increase the company's effficiency and improve its profitability. The organization structure of the company, which had evolved organically over time, was restructured. Though not providing immediate cost savings it will allow the company to better monitor its continued growth without any addlional management.
A new information system is being implemented with integrated estimating, project management, and job costing, that will allow the managers to review their projects weekly and take corrective action while a job is still in process.
Business Plan Review
A $10 million importer and reseller of CNC machine tools had recently experienced financial difficulties due to weaknesses in management and recent relocation. The owner and new management of the company had presented the lender with a proposal to restructure its $5 million of debt.
We reviewed the operations of the company, its proposal, and accompanying projections. We identified and clarified discrepancies and provided a summary of our analysis to the lender identifying the strengths and weaknesses of the plan. We also provided alternate strategies for the lender that assisted the lender in successfully restructuring the terms of the debt.
Operational and Collateral Review
A compression molder, recently purchased out of bankruptcy, with sales of $8 million and $4.4 million in debt had just written down $300 thousand in inventory. This increased its current loss though they attributed the write-down to historical problems.
We were retained to review the operations of the company and to analyze the collateral. Our review discovered that the company was sustaining continuing losses due to a misguided expansion strategy. Our review also identified additional inventory of questionable value.
Additional restrictions of the inventory eligible for collateral were recommended and implemented. We also provided an abbreviated action plan to retum the company to profitability. This included overhead reductions, the consolidation of operations into one facility and improvements in the information systems to determine the profitability of product lines. The lender was able to successfully renegotiate the terms of the debt without any principal reduction.