A family owned company providing lead generation services to Fortune 500 companies had experienced rapid growth that had strained its financial and management resources. The senior lender was eager to exit what had become for them a problem credit, but the ownership was seeking a path to secure additional capital to fund a rebound, to maximize value, and position the company for a future sale. In the meantime, the company’s critical suppliers were severely stretched, and any turnaround and restructuring plan would need to address this weakness.
David Johnson was brought in as Interim VP, Finance, to provide transformational leadership in the areas of cash management and vendor relations as the company sought to develop and execute a turnaround and restructuring plan.
Visibility and Control. The company lacked sufficient visibility into and control over its cash flow. The finance team, lacking experienced leadership, had seen this state of affairs as the way of things, and there was no vision for improvement. In short order a comprehensive cash management protocol had been developed, with a rolling 13-week cash flow forecast, enhanced reporting for the company’s lenders, and the visibility necessary to design a plan that would address the current, tenuous state of affairs with key suppliers.
Restructuring Plan. A key facet of the restructuring plan was the ability to settle aged payables at a discount to face value. Given the state of these payables, and the lack of communication the company had provided to its suppliers, this seemed a reasonable thesis, but the execution would be challenging. There were dozens of suppliers, many of whom had not received substantive communication from the company in months. Difficult negations lay ahead.
Execution. Over a two-month period, and while maintaining oversight of cash management, negotiations with key vendors were initiated. The process was by its very nature contentious, but through a mix of detailed analysis provided to each vendor, a clear set of trade-offs, and the prospect of future business on favorable terms, settlement agreements were reached with the majority of the company’s vendors.
Value Creation. With issue of aged payables addressed, and out of court restructuring was completed, with the company’s subordinated lender providing additional capital while the senior lender exited its position. The turnaround was complete. The company, with more robust controls, and new leadership team and a firmer capital structure, was now positioned to execute its growth plan.