Case Studies

Turnaround of Automotive Parts Company

J.S. Held Acquires Clark Seif Clark, Strengthening West Coast Capabilities for Environmental Claims, Disputes, and Catastrophe Response

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Home·Turnaround of Automotive Parts Company

The Situation

Automotive aftermarket transmissions and torque converters. $94 million. $31 million debt. Private Equity ownership.

  • Contracts were lost due to a lack of sales focus in traditionally stable businesses, leading to systemic underperformance on the bottom line.
  • Management could not cut costs fast enough to maintain liquidity.
  • The company was modestly leveraged, but working capital was scarce in an inventory-intensive business.
  • Three divisions were draining cash from one good division.

How We Advised

Our experts were engaged by a Private Equity firm to assess the business's viability and identify options to create value.

  • We developed a multi-stage process to overhaul the company:
  • Sell off the unprofitable transmission rebuilding facility.
  • Consolidate the transmission facility into the contract manufacturing facility, where there was excess space.
  • Make overhead cuts and consolidate the Texas location.
  • Reduce unprofitable retail locations for the vertically integrated torque converter division.
  • The company realized $3.2 million in cost cuts.
  • Working capital was improved by $5 million through the sale of the unprofitable division.
  • The Private Equity sponsor contributed $1 million to satisfy the lender's request.
  • Lender renewed its relationship with the restructured company.

Related Practice Areas

> Business Plan Validation 
We deliver integrated solutions for distressed and insolvent businesses that maximize recovery, mitigate risk, and restore enterprise value. Our experts are retained to help distressed organizations stabilize operations, protect stakeholder interests, and execute turnaround strategies. We take an operationally-focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Our team delivers hands-on guidance and independent analysis to lenders, creditors, legal counsel, executive teams, boards of directors, and investors. 

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

Key Contact

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