Midwest Biotech

The Situation

This 50 year old energy distribution company experienced a significant downturn during the recession as prices became extremely volatile. Combined with an acquisition which over-levered the company, profitability dropped from adequate to crisis levels. These factors exposed significant deficiencies in financial structure, hedging strategy, and operations. At the time we were introduced, the company’s bank had just severed the relationship, the company’s sole-source provider was threatening to shut off supply, and the family had exhausted their ability to infuse further cash. Initially, we successfully brought them through the liquidity crisis. Then we helped them fix operations and they returned to profitability. Today, we provide monthly financial reviews and special projects support (acquisition due diligence, capital improvement analysis, etc).

 

Role(s)

Interim Sr. Leadership

  • Interim CFO

Consultant

  • Cash management
  • Finance controls
  • Pricing/segmentation
  • Distribution efficiency
  • Contract management
  • Hedging
  • Refinance

Executive Coach

  • President
  • Controller

The Work

Within eight weeks, provided a comprehensive plan to return the organization to profitability through improved operations and a restructured balance sheet. Over the next several years, we supported execution of the plan in both advisory and interim management roles with the following results: secured favorable bridge then permanent financing, improved gross margin by $2.9M on 19% less volume, diversified business, and improved EBITDA from negative ($2.1M) to positive $3.9M.

The Results

  • Achieved $6.0M of EBITDA improvements on 19% less volume
  • Provided financial reporting/dashboards for improved management visibility and faster decision-making
  • Managed cash to improve vendor relationships and terms
  • Purchasing improvements due to negotiated exclusivity and better commodities hedging
  • Customer contract restructuring and management
  • Customer segmentation and pricing improvements (reduced SKUs in core, diversified offerings outside core)
  • Organizational restructuring eliminated over-staffing
  • Secured favorable financing to restructure balance sheet within the first year:
    1. $9.5M in alternative bridge financing within 4 months
    2. $13.5M in permanent, replacement senior financing
    3. $11.0M in additional junior financing

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Overview

  • Energy
  • Restructuring and Turnaround

Engagement Team