A Private Equity firm with a long history of success acquired a market leader in the Heavy Rigging, Machinery Moving and Millwrighting business.
To meet competitive pressures the acquired company entered a related but capital-intensive business via a joint venture with a large international corporation. The company then dramatically increased its labor cost by employing skilled people with highly specialized talents and invested deeply in heavy equipment. This soon exhausted both its cash reserves and bank operating line before the new service offerings began generating revenues. The company was struggling to make payroll and keep its most essential payables at 120 days. The Private Equity firm had lost confidence in top management.
Two E78 executives were engaged as interim CEO and CFO, respectively. Strict cash management was instituted. Labor cost and other operating expenses were reduced by over 15%. The financial reporting system was overhauled to produce timely, actionable information regarding job costs and margins. Short term financing was obtained to assure the ability to meet payroll and ease trade creditor pressures. The job/project management system was re-defined to improve the change order process. The joint venture terms were renegotiated, and marketing efforts were re-structured. Once the company was stabilized and financial results began to turn positive, an industry veteran was recruited as permanent CEO and an experienced CFO brought on board.
Revenue turned around and began growing. Management is now focused on customer needs and aligned along service offerings with a matrix structure allowing cross-selling. The financial management system now provides timely information designed to further the achievement of corporate goals and allow operating managers to track all job/project costs. Control over the change order process has been gained resulting in change orders being a profit generating activity, not a source of losses. The company’s new service offerings dominate its markets. Management is focused on achieving results and the company is profitable with positive cash flow. The Private Equity firm is looking forward to a monetary event in the coming year.