Case Studies

Turnaround of Medical Device Manufacturer

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 Medical Device Manufacturer

The Situation

Medical Device Manufacturer. $40 million in sales. $20 million debt.

  • The company had sold a division to a customer, reducing sales and EBITDA.
  • Profits from the sale were used to pay owners and taxes and to reduce a minimal amount of debt.
  • New business was slow in replacing lost sales.
  • A new customer would require $4 million in new capital and $2 million in increased Revolver Availability.
  • With the sale of the division, revenue decreased by 40% and EBITDA by 60%.
  • The company was distracted by sale,s and new Business launches were delayed.
  • The company's Gross Margin was decreasing.
  • New Business would require additional capital and an increase to Revolver for assets located in the Dominican Republic.
  • The company had broken a covenant, and the bank was concerned about increasing exposure.
  • Liquidity was a challenge as A/R had grown, and A/P was stretched.

How We Advised

Our experts worked with management to develop a restructuring plan.

  • Margin erosion had been isolated to 2 new product launches, but solutions were not being provided. Partnered with management to improve the production process and reduce costs.
  • Created a robust model that provided multiple scenarios regarding new business to show profitability and working capital requirements.
  • Helped the company negotiate a loan modification agreement that prevented the bank from calling loans and gave investors confidence to invest additional capital.
  • New capital of $4 million was provided by the ownership group.
  • The bank allowed the company to seek alternative funding for some equipment.
  • The company and the bank were able to easily understand the potential financial impact of the new business and assess the risk.
  • A/R decreased as the company negotiated a large settlement with a customer, and A/P was brought into acceptable terms.
  • New product lines improved profitability, and EBITDA increased back to historical levels.
  • The new business project was given the green light to proceed.

Related Practice Areas

> 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. 

 

> Solutions for Distressed Situations 
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. 

Key Contact

For additional information about the engagement or to learn more about our services, contact:

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