ABC used to Sell Company

DistributionFiduciary ServicesLitigation SupportTurnarounds & Restructuring

20M

Annual Sales

6M

in Debt

Kilpatrick Company, Boynton Beach Florida

Challenge

Distribution of landscaping and irrigation products. Revenues of $20 million down 67% from 2 years ago. $6 million in debt. Family had guaranteed loans.

  • Sales revenue had declined to $20 million as economy ceased.
  • Operating Losses in excess of ($150K) per month.
  • Bank deemed $3.4 million of inventory ineligible, reducing Borrowing Base Availability to under $250K.
  • Vendors stretched with $2.3 million of $3.5 million of A/P not current.
  • Inventory being depleted to pay for cash burn.
  • No unencumbered assets remaining.
  • Bank demanded to be paid back within 3 months.

Solution

  • Morris Anderson worked with management to cut costs and reduce EBITDA losses by $1.8 million annually.
  • Reduced ineligible inventory by $1.5 million in 4 months, allowing company to purchase current product.
  • Negotiated with bank to extend refinancing period to 6 months.
  • Reached out to over 50 banks to refinance loans and 10 investors to purchase company.

Results

  • Company sold to Strategic Competitor providing jobs for employees and owner.
  • Sold the company through an Assignment for the Benefit of Creditors to provide comfort to the buyer that old liabilities would not be its problem.
  • Negotiated $800K discount from bank to satisfy loans and release the guarantees.