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Case Study: Proxy Solicitation Firm

Company: $130 Million shareholder communication and proxy solicitation firm based in New York with operations in nine countries.

Situation/ Tasks Performed: Due to an aggressive strategy of growth by acquisition through the 90s, the firm acquired competitors without fully rationalizing the merged operations, and over time, its focus on the top line masked underlying profitability issues. In addition, two larger mergers had left the company’s finance department fractured, unresponsive, managing cash flow ineffectively and unable to maintain credibility with banks. Senior lenders were beginning to question the firm’s performance and strategy. As capital markets weakened at the beginning of 2001, the company experienced a significant downturn in its core businesses. Ironically, the market share increased as M&A activity decreased, suggesting competitors were experiencing equally challenging conditions. Believing the down cycle would be brief, the company laid off some personnel. As the downturn lengthened, the executives recognized the warning signs in their company’s performance and engaged TRG to help them develop a turnaround strategy.

TRG identified and implemented a reduction in overall headcount, unproductive businesses and other assets. Additionally, TRG worked with the executives to sell non-essential assets to reduce leverage. The company streamlined critical financial functions and consolidated departments to increase efficiency and reduce fixed costs. As financial advisor, TRG helped negotiate the restructuring of the firm’s lender syndicate. The efforts reduced the firm’s senior debt from $47 million to $30 million and enabled the company to secure new mezzanine financing.

Results: The turnaround program provided critical cash management, enhanced profitability and restored credibility wit the firm’s creditors. With improved performance and a stable balance sheet the firm’s executives elected to sell the business to an international competitor at a price that met the needs of its stakeholders and effectively doubled the enterprise value.

Nature of Assignment:
Primary: Turnaround Consulting
Secondary: Business Stabilization & Rationalization
Tertiary: Financial Restructuring

Industry: Finance Services

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