• The Company had just sold a profitable but non-core product line, utilizing a portion of the proceeds to pay down debt while retaining the balance to finance possible strategic alternatives.
• After the sale, the Company’s core business was saddled with excess inventory, flat sales and declining margins while also facing significant capital expenditures at its oldest plant.
• The key management team consisted of a father and son who had very different visions of the future for the Company.
• The owners were interested in considering a broad spectrum of strategic alternatives including improving core business performance, plant consolidation, acquisitions and/or product line expansions. The Company engaged Fort Dearborn to assist with evaluating strategic alternatives.
Working with management, Fort Dearborn:
• Analyzed profitability by product line, customer type and plant
• Identified detailed inventory reduction initiatives that will reduce inventory by $5 million
• Identified price increase and other profit improvement initiatives totaling $1.5 million annually
• Prepared an updated financial forecast assuming status quo as well as various plant consolidation scenarios and related detailed forecasts including estimated Cap Ex necessary to facilitate consolidation
• Evaluated execution risks with each scenario including managements ability to implement plans