THE CLIENT
A sixty-year-old food processor that distributes a full line of branded food products throughout Southern California.
THE SITUATION
The Company was in a turnaround situation and looking for an out-of-court restructuring.
Its profitability had deteriorated significantly due to aggressive bidding and lack of appropriate financial reporting to manage the bid process. The private equity owner was looking at a quick-sale or a forced liquidation due to negative EBITDA. The lender was caught by surprise and could not provide additional funding due to an existing over-advance position.
THE SOLUTION
Avant Advisory Group developed a plan to manage cash flows that included identifying additional sources of internally-generated capital while obtaining additional time from the lender to stabilize business operations. Avant renegotiated customer contracts with full disclosure to obtain better gross margins. We helped renegotiate union contracts to support the business through the return to profitability. We took a hands-on approach and developed strong lines of communication with the original lender through the restructuring process to help ensure a refinancing.
THE RESULTS
The Company is now more profitable than any time in its entire history. It’s been sold to an international investor at a competitive valuation, and the private equity firm obtained full recovery and returns. Financial reporting and controls over the bid process were improved, and the company is poised to launch new products internationally.