Musical Instrument Manufacturer

Company Overview

Musical Instrument Manufacturer - a $35 million manufacturer and distributor of branded band and orchestral "student line" wind instruments including clarinets, flutes, saxophones, trumpets, trombones, etc. to music dealers servicing school and band music programs.  The Company operated 3 U.S. manufacturing plants and a French operation that dated back to the 1700’s.

 
Engagement Overview
•  The sudden death of the founder left the Company without a succession plan.  In addition, consistent with industry trends, the Company  experienced sales and margin challenges due to the influx of low-priced instruments imported from China, reductions in school music budgets and the internet creating an efficient secondary market for used instruments.

•  FDP was initially engaged to develop a  plan to stabilize and return the Company to profitability, to improve working capital and to develop a long-term strategy to maximize shareholder value.

•  FDP developed profit improvement tactics including:
•A program to outsource/import certain components and complete instruments
•Initiated a plant consolidation strategy to reduce fixed costs
•Restructured sales and marketing initiatives to drive volume/focus on top line
•Targeted inefficiencies in the manufacturing process to reduce WIP inventory and performed a rationalization of accessory SKUs

•  Working with management and ownership, FDP ascertained that the best approach to maximize shareholder value was to either initiate an acquisition strategy to achieve critical mass in the industry or entertain the sale of the Company.  Ownership elected to sell the Company.

•  As a result of turnover and lack of management depth, FDP personnel served as both interim CFO and CEO during the turnaround and sale process.

•  FDP was engaged to market the Company for sale, prepared an information memorandum and approached a targeted list of industry and financial buyers.
Results
•  Identified and implemented $5 million in immediate strategic and tactical initiatives to restore profitability and stabilize the Company.

•  Identified additional longer term strategies with potential savings in excess of $5 million.

•  Generated a pre-emptive bid and ultimately sold  the Company to a major instrument manufacturer.

•  Completed the sale engagement within four months of retention.

•  FDP’s deep knowledge of the Company and its accounting practices resulted in the successful defense of the purchase price in a post-closing arbitration ruling by a Big Four public accounting firm.