Situation appraisal: As a Tier II supplier, the company was attempting to recover from the impact of the 2008/2009 recession's impact upon its customers within the auto industry. However, the owner was more focused on increasing the company's sales volume to pre-2008 levels versus improving contract margins, resulting in reducing operating income and cash outflows. In addition, the Company was facing significant penalties realted to non-payment of past due payroll taxes and property taxes.
Services highlighted: Mike immediately developed a working 13 week cash flow demonstrating the short-term need for a $500K bridge loan from the Bank. For additional short-term liquidity, he also identified idle assets that could generate loan pay-down for the Bank and additional cash inflows for the Company. Mike worked with the owner and the two general managers in developing profitabilty analysis by customer, which supported the monthly financial projection.
Outcome: The Company was able to re-negotiate the forbearance agreement for the next year with the Bank. The Company also improved cash flows by reducing operating costs by $1.5MM and liquidating $2.0MM in idle assets while negotiating payment plans for its past due payroll taxes and property taxes. Lastly, Mike acted a trusted advisor to the general managers who were essentially operating the Company.