Medium Sized Construction Firm
We were engaged by the Company in June, to learn almost immediately that the Company was losing money at the rate of about $50,000 per month.
We were referred by the attorney for their bank, who had indicated the Company was in need of some reorganization.
The three owners were third generation, all related, and all had distinct positions and responsibilities within the organization. One was the primary salesman, one ran operations, and the third was the administrative and finance partner.
Our initial discoveries after a couple of weeks indicated the Company had funded its losses by drawing down a working capital facility with their bank to its maximum of almost $500,000. The bank was concerned, and the Company was also well past due to other critical vendors and to their employees' labor unions on dues payments. Further research provided us with information about a payout obligation to a retired relative for his stock in the Company which, in the current financial circumstances, was simply not affordable.
Sorting through all of this was the "low hanging fruit" needing resolution to bring the Company to a cash neutral position. In addition, the operations of the enterprise needed a close review because the actual projects were also losing money on a job-by-job basis.
After negotiating favorable terms with the labor unions, establishing credit with critical vendors, and satisfying the bank regarding the viability of their senior secured credit facility, we undertook the renegotiation of the amounts due to the former shareholder.
We also reviewed all proposed contracts and estimates to assure profitability in the core business.
The management and ownership team was not only satisfied with our suggestions, but they implemented them almost immediately. This led the Company to an almost immediate turnaround.
In under a year, the Company moved from losing money to generating significant profits and cash flows. Three years after we arrived, the Company attained 7 figure profits, and we negotiated a transaction with the same former shareholder to buy the building in which the Company operated at a discount and with more than reasonable payment terms.