Professional Accomplishments
Plant Consolidation and Product Rationalization
Situation
A prominent mezzanine lender issued a “loan to own” to a manufacturing company, expecting them to default. They did, and the lender took over the company. In an acquisition search, the lender found a similar, nearly competitive company with two plants in the Midwest and one in Asia. They acquired this business and appointed the president of the original platform company as the CEO of the overall company. This arrangement was not successful, and he was released after three years.
The bolt-on acquisition had products that were competitive with the platform. The three domestic plants were operating at roughly 30-35% capacity each. The Asian operation was similarly loaded, essentially making one product for a very large customer. In addition, the management team was toxic, motivated by political considerations, and under-performing.
The sponsor wanted the business problems fixed and the company’s performance improved so it could be positioned as soon as possible for an exit. I was brought in to run the business and accomplish the exit.
Action Plan
- Step one was to “top grade” the senior management team. I replaced all eleven senior managers and a number of those in the second tier, which resulted in a high-quality, responsive team of professionals. I also created a role called “Senior VP of Sales and Marketing,” and recruited a well-known industry icon.
- Simultaneously rebranded the company with a catchy, distinctive name which covered all the products. We chose which products to keep based on suitability for purpose, market acceptance, and margins.
- Consolidated manufacturing, closed two domestic plants and consolidated into a single, midwestern facility. Simultaneously re-designing the plant achieved a far more efficient, single plant operating at 75-80% of capacity.
- Off-shored several appropriate products to the Asian operation which resulted in the expected improvement in margin.
Results
The company achieved record sales and earnings and was sold at a very attractive multiple to a large, multinational strategic buyer in less than two years.