Case
Study: Technology Manufacturer
Financial Advisory, Valuation
Company: $120 million public company that manufactures
and markets a wide range of products in three categories: industrial technology;
portable industrial computers; vehicle diagnostic hardware and software.
Situation/ Tasks Performed: The Company had pursued
an acquisition strategy across all divisions, leading to $53 million of
goodwill and an over-leveraged balance sheet with $70 million of long
term debt and only 4.2 million of EBITDA. The Company faced a cash crisis
and could not meet current interest payments.
The company's divisions, one of which was overseas, were unrelated and
did not receive equal attention. The industrial technology division experienced
low inventory turnover; the diagnostic division, while experiencing stable
performance, had unproven products in pipeline; and, the computer division
was given little direction, except to "grow sales". Stock price
was trading under $2 from $12 earlier in the year.
Per TRG's recommendation, the CEO was replaced and corporate and overseas
personnel were reduced. An inventory reduction plan was established and
the overseas sales efforts were focused on current products and on reducing
new product development.
Results: Non-core businesses in industrial technology
and portable computers were sold as the Company refocused on its core
diagnostic business. Bank loans were reduced by 60% over a nine-month
period through the sale of two businesses and two facilities. The Company
and TRG successfully negotiated a new long-term agreement.
Nature of Assignment:
Primary: Financial Advisory
Secondary: Valuation
Industry: Technology
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