MorrisAnderson Bridging HVAC Company to a Sale Transaction

Challenge

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$25 million plumbing supply company and HVAC distributor. $5 million debt.

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• Company saw revenues drop 40% over a two year period.
• Gross margin dropped 4% due to inefficient purchasing.
• Ineligible Accounts Receivable reached 43% of outstanding A/R.
• $2.5 million invested by ownership used up in a year to fund losses.
• Forced liquidation values showed a 60% loss for senior bank.
• Negotiated sale of business almost derailed by competitors holding unsecured claims filing Involuntary Bankruptcy petition.

Solution

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• MorrisAnderson engaged initially as financial advisor, transitioned to interim management and investment banker.
• Negotiated additional terms with key vendors.
• Identified buyer, negotiated APA and sale of company.
• Sale conducted outside of Bankruptcy, until forced into Bankruptcy proceedings and then sold through §363 sale process.

Results

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• $2.6 million of inventory sold through consignment plan using eventual buyer to manage the process.
• Overall recovery increased 100% over liquidation through sale and organized liquidation efforts.
• Company survived what would have been a liquidation and 50 employees found employment with the new company.