MorrisAnderson Saved A Family Business in a Turnaround

DistributionLitigation SupportTurnarounds & Restructuring

66M

Annual Sales

15M

in Debt

Roman , Addison Illinois

Challenge

Wholesale giftware development and distribution. Revenue down 50% to $66 million. $15 million debt. 13k SKUs, $14 million inventory, 2x annual inventory turnover. 400k square foot warehouse.

  1. Third generation family ownership.
  2. Company losing $500k EBITDA annually.
  3. Increased competition from Internet merchants and mass retailers, the demise of the small retail shop and the loss of key distribution rights pushed sales from $120 million to $66 million.
  4. Inventory was at a bloated $14 million level.
  5. Excessive warehouse overhead contributed to annual losses.
  6. Ownership was planning to liquidate the company.

Solution

  • Morris Anderson engaged as financial advisor.
  • Morris Anderson determined that several business lines could be profitable, and worked toward maximizing the value of the lines while reducing unprofitable lines and cutting overhead.
  • Total SKUs were reduced over 50% to 5k.
  • Inventory was reduced by $7 million.
  • Warehouse was relocated and costs dropped from $2.7 million to $800k.

Results

  • Customer reaction was positive, volume has increased to the point that additional warehouse is needed.
  • EBITDA increased to $1.8 million.
  • Roman was awarded both the Chicago Turnaround Management Association Medium Turnaround of the Year and the National Mid-Sized Turnaround of the year, Honorable Mention.

Contributors