Construction Company in need of Financial Restructuring, Leadership Coaching, Team Building and Strategic Planning
Assessment Summary:
This four decade old construction company had been purchased at the cyclical peak from the founder by its successful sales manager. Subsequent to the purchase, the construction market collapsed, exposing cultural and planning weaknesses exacerbating the significant decrease in sales and profitability.
The loss of market momentum and lack of strategic direction resulted in the need to annually fund operations through financing provided by its investor board. With each round of financing, the board became more fatigued and the operating owner’s equity interest continued to be diluted.
The operating owner sought See Change Management’s Phase I assistance to undergo team building and strategic planning and to develop a financial restructuring plan to return the Company to profitability.
The operating owner then approached See Change Management to assist him in a Phase II project to financially restructure the Company's excessively leveraged balance sheet to position the organization to take advantage of the impending market rebound.
Evolution:
See Change Management’s Phase I engagement focused on:
-
Developing/implementing a financial restructuring plan providing for sustainability at a significantly reduced volume level
-
Leading a market based, strategic planning process with the leadership team, focused on re-establishing the organization’s market presence
-
Introducing a team building model detailing the trust, conflict, accountability, commitment and focus on results necessary for organizational success
-
Preparing quarterly/annual reporting packages creating transparency for the investor Board
-
Developing cash management tools allowing the Company to sustain liquidity challenges associated with seasonality of the business
-
Coaching the business owner in all aspects of leadership and personal development
See Change Management’s Phase II engagement focused on:
-
Creating a “fresh start” balance sheet allowing the company to obtain traditional financing
-
Positioning the operating owner with a strategy to obtained required concessions from the investor board members
-
Spearheading the negotiation and documentation with key legal/tax/accounting intermediaries of the financial restructuring
Transformation:
As a result of the above evolutionary process:
Following is a summary of the balance sheet impact of the Phase II initiative
| Balance Sheet Restructuring | ||||
| Before | After | |||
| Shareholder Debt: | $ 1,121 | $ 170 | ||
| Other Debtors: | $ 150 | $ 150 | ||
| Total Debt: | $ 1,271 | $ 320 | ||
| Shareholder Equity: | $ 920 | $ 1,770 | ||
| Retained Deficit: | $ (1,770) | $ (1,770) | ||
| Net Equity (Deficit): | $ (850) | $ - | ||
The net impact of the restructuring was the forgiveness of a majority of the company’s debt combined with the transfer of 100% of the equity ownership to the operating owner
Based upon the restructured balance sheet, the Company was successful in obtaining its own line of credit facility
The Company remains challenged, post restructuring, by a number of external market and internal cultural forces. See Change Management’s multi phased engagement has provided the operating owner with the time and flexibility to regain control of his business during this significant period of financial challenge.
