Archives: Feature products

M&A, Board, Information Management, Operations, Lean

An EGI Advisor was hired by a PEG in the initial stage of investing in a building supplies business to serve as interim President and Board member of one of its portfolio companies when the incumbent President experienced health issues during the acquisition process.

EGI’s Advisor immediately focused the management team on fundamental business opportunities to improve profitability, including creating and responding to margin analysis and customer segmentation evaluation as well as taking selective price increases. The EGI Advisor also brought in an Industrial Engineer from EGI to introduce Lean manufacturing techniques, while attacking weak information systems that were placing artificial constraints on the Company. The customer service system was redesigned to be more customer-friendly, to decrease order entry and manufacturing errors, to lower process time, and, importantly, to facilitate expanded real-time pricing. The production control module was enhanced in conjunction with optimizing manufacturing layout and production flow to boost productivity and minimize throughput time. Also, the inventory control module was modified to dramatically reduce raw material and work-in-process inventory.

The EGI Advisor positioned the Company for success by sharpening its focus on sales opportunities, re-designing business systems and processes, and redirecting IT development. As a result, the Company was successfully divested to a strategic buyer in 13 months, at a triple-digit ROI.

Complex Turnaround, Supply Chain, Sales & Marketing, Interim Management

An EGI Advisor was recommended by a New York investment advisory firm to the parent holding company with a portfolio of nine companies. The EGI Advisor was subsequently hired as interim President of the largest of the nine companies with the approval of the holding company Board and its PEG owner, an international publicly traded investment firm. The holding company had revenues in excess of $600 Million and decimated financial performance, primarily attributed to excess leverage and operating issues at its largest flagship company. This Company manufactured custom-engineered metal buildings and had approximately $300 Million in revenue. A complex bankruptcy loomed involving all nine companies, and the survival of the flagship and therefore parent Company was uncertain. To make matters more challenging, the backdrop was an entire industry in total chaos due to worldwide fluctuations in steel prices and disruption in supply.

The flagship Company faced a series of equally critical problems:

Success was achieved by mobilizing internal resources and supplementing them with operating expertise from EGI. An EGI Advisor served as Vice President of Marketing and coordinated the Company’s relaunch. Another Advisor stepped in as Vice President of Engineering to totally refocus this organization to achieve accurate designs and on-time delivery at reduced costs resulting in a remarkable customer relations victory. Two EGI Associates provided strategic financial analysis that was crucial to success. Additionally, an EGI Associate conducted face-to-face customer surveys and performed market research while another colleague analyzed organizational consolidation opportunities.

All these problematic issues were addressed as follows:

The EGI Team orchestrated a very successful turnaround of the flagship entity over a 21-month period and thereby saved the parent holding Company. The flagship Company had a highly effective relaunch and secured record performance allowing the holding Company to ultimately exit bankruptcy. Shortly thereafter, the parent Company sold for a twelve multiple to a Fortune 500 industry player.

Turnaround, Sales & Marketing, Board, M&A, Interim Management

An EGI Advisor was brought into a privately-held major branded toy company as interim President and Chief Operating Officer and soon aligned himself with, and retained, the outgoing CFO who subsequently became part of EGI. The Company designed, manufactured, and marketed exclusive collectible dolls, but had dated systems, controls, and marketing strategies. As a result, the Company was well over $25 Million in debt and had a negative net worth of close to $15 Million.

Despite a looming bankruptcy, the EGI Advisor worked with the two main shareholders to quickly achieve a dramatic turnaround by exiting unprofitable product lines, developing two new product umbrellas, entering new channels of distribution, re-launching all merchandising materials, and obtaining licenses with Disney, Hallmark and Sony. Key milestone accomplishments achieved over less than 18 months included:

• Negotiating a restructuring of debt
• Increasing sales by 32%
• Elevating gross profit eight points

The Company was then sold out of Chapter 11 in a 363 sale at $16 Million for 80% ownership, with the balance of 20% remaining with the original shareholders. Unsecured creditors were paid 85 cents on the dollar.

Sell-Side Advisory, Family Business

EGI was hired as an exclusive sell-side Advisor to an established service and technology provider in the continuing education field. Business sectors served included healthcare, pharmaceutical, and financial companies. Our Client was a U.S. family business that provided services on a worldwide basis.

The EGI Advisor focused on 50 targeted high-potential buyers. As a result, 40 NDAs and CIMs were issued. This led to eight negotiated LOIs and ultimately seven management meetings. We selected three bidders for the final round. The total lapsed time for the entire process was six months.

This transaction netted a strong multiple while the Buyer retained our Client’s CEO in the same position and maintained all other employees with expanded duties and compensation. The CEO received equity options as did several of his staff.

M&A, Capital Raising, Finance Advisor, Co-investing, Board

The Company retained an EGI Advisor during its search for equity. The Company was founded as an importer of cotton health/beauty products to be sold into the U.S. market. It subsequently built its own plant and opened with 25 employees. Annual sales then grew to $5 Million, but profits were never realized and the Company remained No. 7 in a seven-competitor industry. The EGI Advisor believed the industry was perfect for consolidation. EGI’s Advisor invested in the Company in return for a 25% ownership stake, a Board seat, and the role of Executive VP/CFO to focus on strategic growth.

Believing it was necessary for the Company to become a more competitive player in the industry before moving forward with consolidation plans, the EGI Advisor’s capital contribution was used to increase production capacity and expand the product line as well as relaunch the Company’s marketing programs. After just a year, sales grew 40%, with breakeven profits and cash flow. At this point, the EGI Advisor decided to start consolidating the industry. A major European firm agreed to merge its U.S. subsidiary with the Company, realizing that the Company was beginning to move ahead of it in market share. Also, another European-based firm agreed to merge its U.S. operations with the Company. As a result, three plants were combined into two and three sets of costs associated with SG&A expenses were combined into one. The Company then invested in automated production lines to reduce labor costs and clearly owned the most modern, efficient plants in the industry. Revenues tripled in two years.

Meanwhile, a major U.S. competitor accumulated three other industry players, but then struggled with the consolidation before being acquired by a private equity group. This competitor had purchased the cotton health/beauty business of a major medical products group and became the largest supplier in the Canadian market. As a result, the competitor was suffering from a high debt load, old equipment and capital constraints and despite restructuring remained victim to competition from the company where EGI’s Advisor was involved. The EGI Advisor initiated contact and the competitor agreed to sell its $85 Million revenue related business (including six plants), inventory, and receivables for $18 Million cash.

The net result: The EGI Advisor led his client to become the North American giant in the cotton business with $120 Million in sales, and four times larger than the only remaining competitor. EGI’s Advisor then sold all of his interests to existing shareholders, having taken the business from an enterprise value of $4 Million to $48 Million over the seven year period.

M&A, Board, Information Management, Operations, Lean

An EGI Advisor was hired by a PEG in the initial stage of investing in a building supplies business to serve as interim President and Board member of one of its portfolio companies when the incumbent President experienced health issues during the acquisition process.

EGI’s Advisor immediately focused the management team on fundamental business opportunities to improve profitability, including creating and responding to margin analysis and customer segmentation evaluation as well as taking selective price increases. The EGI Advisor also brought in an Industrial Engineer from EGI to introduce Lean manufacturing techniques, while attacking weak information systems that were placing artificial constraints on the Company. The customer service system was redesigned to be more customer-friendly, to decrease order entry and manufacturing errors, to lower process time, and, importantly, to facilitate expanded real-time pricing. The production control module was enhanced in conjunction with optimizing manufacturing layout and production flow to boost productivity and minimize throughput time. Also, the inventory control module was modified to dramatically reduce raw material and work-in-process inventory.

The EGI Advisor positioned the Company for success by sharpening its focus on sales opportunities, re-designing business systems and processes, and redirecting IT development. As a result, the Company was successfully divested to a strategic buyer in 13 months, at a triple-digit ROI.

Advisor, M&A, Restructuring, Growth

An EGI Advisor served as General Manager of a nationally branded two-step manufacturer and marketer of vertical blinds with sales in excess of $100 Million to refocus and redirect both the Commercial and National Accounts business units. The entity was owned by a major conglomerate.

The EGI Advisor accomplished the key objective with National Accounts by strengthening the partnership with two major U.S. retailers through exclusive marketing initiatives that achieved strong, mutually profitable growth. In the Commercial business, critical achievements included merging several functions of this division into the core corporate structure as well as implementation of a new customer service system that greatly improved responsiveness.

In conjunction with energizing the performance of these two business units, EGI’s Advisor played a central role in a divestiture for more than $90 Million.

Advisor, M&A, Restructuring, Growth

An EGI Advisor served as General Manager of a nationally branded two-step manufacturer and marketer of vertical blinds with sales in excess of $100 Million to refocus and redirect both the Commercial and National Accounts business units. The entity was owned by a major conglomerate.

The EGI Advisor accomplished the key objective with National Accounts by strengthening the partnership with two major U.S. retailers through exclusive marketing initiatives that achieved strong, mutually profitable growth. In the Commercial business, critical achievements included merging several functions of this division into the core corporate structure as well as implementation of a new customer service system that greatly improved responsiveness.

In conjunction with energizing the performance of these two business units, EGI’s Advisor played a central role in a divestiture for more than $90 Million.

Complex Turnaround, Supply Chain, Sales & Marketing, Interim Management

An EGI Advisor was recommended by a New York investment advisory firm to the parent holding company with a portfolio of nine companies. The EGI Advisor was subsequently hired as interim President of the largest of the nine companies with the approval of the holding company Board and its PEG owner, an international publicly traded investment firm. The holding company had revenues in excess of $600 Million and decimated financial performance, primarily attributed to excess leverage and operating issues at its largest flagship company. This Company manufactured custom-engineered metal buildings and had approximately $300 Million in revenue. A complex bankruptcy loomed involving all nine companies, and the survival of the flagship and therefore parent Company was uncertain. To make matters more challenging, the backdrop was an entire industry in total chaos due to worldwide fluctuations in steel prices and disruption in supply.

The flagship Company faced a series of equally critical problems:

Success was achieved by mobilizing internal resources and supplementing them with operating expertise from EGI. An EGI Advisor served as Vice President of Marketing and coordinated the Company’s relaunch. Another Advisor stepped in as Vice President of Engineering to totally refocus this organization to achieve accurate designs and on-time delivery at reduced costs resulting in a remarkable customer relations victory. Two EGI Associates provided strategic financial analysis that was crucial to success. Additionally, an EGI Associate conducted face-to-face customer surveys and performed market research while another colleague analyzed organizational consolidation opportunities.

All these problematic issues were addressed as follows:

The EGI Team orchestrated a very successful turnaround of the flagship entity over a 21-month period and thereby saved the parent holding Company. The flagship Company had a highly effective relaunch and secured record performance allowing the holding Company to ultimately exit bankruptcy. Shortly thereafter, the parent Company sold for a twelve multiple to a Fortune 500 industry player.

Sales and Marketing Strategies

While serving a global home fashions company, an EGI Advisor was chosen to manage a newly acquired entity that was losing money, merge this division into the corporate culture, and return it to profitability while positioning the new division to become a sub-brand under the parent company umbrella and major player in Big Box retail. The new division had lost over $1 Million the year before the EGI Advisor was hired.

A strategic plan and growth initiatives were put into place within three months and a turnaround initiated. This was accomplished by replacing three of the top four managers, focusing on profitable customers and profitable channels of trade, and reducing operating costs by closing one of three fabrication centers.

The result was that profit increased by more than $2 Million. In fact, the division was so successful that the parent company rolled all of their national account sales into the new division. With this foundation in place, sales increased from about $40 Million to over $150 Million.

Business Development, Turnaround, Financial Advisory

A leading U.S. manufacturer of food service and retail fixtures and dealer of related equipment for national restaurant chains such as Dunkin Donuts, Papa Johns and Burger King, and big-box retailers including WalMart, was experiencing a crisis and possible liquidation attributed to plummeting sales and EBITDA coupled with rising costs. The Company had a challenging governance structure with an independent Board of Directors and multiple lenders who were also the shareholders. EGI was hired to complete a comprehensive evaluation on both a top-down and bottom-up basis. EGI’s assessment clearly delineated all aspects of the available options, including: a cash-neutral liquidation, a divestiture estimated at $10 to $12 Million, and a turnaround to relaunch and save the Company. The turnaround scenario was predicated on specific courses of action and included investment, ROI, and projected terminal value metrics.

The turnaround alternative was selected by the stakeholders to position the company for an exit event at maximum value. EGI transitioned from an advisory role to that of interim management, ultimately providing a CEO, CFO, Vice President Sales and Marketing, and Vice President of Engineering. EGI divested an idle plant for well over $1 Million, achieved $200,000 in risk management savings, and reviewed and overhauled all critical business processes of the Company while effecting a cultural shift throughout the organization to create a platform for the Company relaunch and long-term growth. Examples of business critical actions implemented by EGI included:

• Sales and Marketing – Provided a vision and value statement as well as a filter for pursuit of growth opportunities. Upgraded the sales team by replacing 30% of staff. Emphasized the importance of customer face time as well as analysis and metrics to manage by the numbers. Made new accounts a top priority. Successfully implemented sales contests to drive performance, energy, and results.
• Engineering – Upgraded personnel and implemented new software platforms to improve engineering and manufacturing productivity, material utilization, and reduce errors.
• Manufacturing – Closed satellite plant and relocated office to centralize all operations at the flagship operation. Introduced both an independent quality department and an industrial engineering function. Implemented a Master Schedule that encompassed sales, engineering, manufacturing, and shipping. Reduced material consumption and managed labor as a variable cost. These actions quickly and dramatically improved gross profit.
• Finance – Renamed the Finance Department to Business Intelligence to reflect its new role of providing meaningful, actionable reports with recommendations and proactive intervention.
• IT – Developed a corporate systems strategy and, more specifically, implemented short-term payback tools such as a spreadsheet to provide capacity planning as well as a spreadsheet to specify manufacturing man-loading. Streamlined and optimized all business systems in conjunction with implementing Lean office.
• Human Resources – The single most important success was effecting a cultural shift to produce an environment of empowerment and entrepreneurship. Introduced a bonus system that provided a sharp focus and common goal.

Over a 12-month period under EGI’s management, the sales run rate was increased from $55 Million to over $70 Million, while the gross margin was improved by five points, with an EBITDA plan in excess of $3 Million and a projected terminal value of $30 to $35 Million. EGI then participated in the recruitment of a new management team from within the industry to take the Company to the next level based on the platform that had been effected by EGI. The Company was soon after divested for a 10+ multiple.

Turnaround, Interim Management, Sales & Marketing, Finance

An EGI Advisor was engaged by the owners as interim President of the Company, a privately-held window coverings business with sales over $100 Million. This vertically-integrated business sold multiple product lines direct to the retail trade.

The Company slipped into an underperforming situation after the previous President departed, was in need of cash and debt reduction, and had been given only six months by the bank to achieve results. A new strategic plan developed by the EGI Advisor focused the management team on profitable sales, balance sheet management, cost reduction, and supply chain as well as breakthrough marketing initiatives. The team achieved:

• 10% operating profit in the first year
• Generated significant free cash flow in the first year
• Reduced expenses by $12 Million
• Lowered inventory by $15 Million
• Launched a major retailer account at $10 Million in annual sales
• Opened a major DIY account with projected annual sales of $50 Million
• Introduced a new product with $7 Million in annual gross profit

The Company attained low-cost producer status in many categories by reducing cost of goods sold through a Cost Busters Program. This comprehensive and focused strategy led to the most profitable year in the Company’s 25-year history.

Advisor, Sales & Marketing, Operations, Lean, Supply Chain

EGI was engaged to achieve a comprehensive company transformation of a niche ready-to-finish furniture manufacturer with nationwide distribution utilizing a dealer network serviced by a captive and co-managed transportation firm. This required addressing every line item on the P&L and Balance Sheet.

EGI implemented sweeping sales and marketing initiatives, re-launched the sales group and initiated first-time, industry-wide programs to reposition product perception from low-priced, low-cost to higher margin customizable products. This was accomplished through the addition of unique product offerings, technology accessories, additional wood species, point-of-sale programs and marketing materials to provide the Company’s dealers incremental sales. As a result of the operational efficiencies gained, the Company was also able to create a totally new product offering in just six weeks and successfully launch a test market program with a major big box retailer for nationwide distribution that would increase company sales by over 20% in only six months.

EGI also employed an array of operational optimization techniques including its Lean Business Template; value analysis and value engineering; value stream mapping; transportation, logistics, and supply chain redetermination; systems enhancements; and business process evaluations to identify and exploit opportunities and to address struggle points. Each and every point-of-cost or inefficiency throughout the enterprise delivery system, including transportation, supply chain, and manufacturing, was examined. Based on sales analysis, marketplace considerations, and bottom-line profitability, 250 of 550 SKU’s were eliminated. The remaining products were subjected to exhaustive value engineering while considering labor costs, producibility, and customer preferences. Then the transportation and supply chain were totally reset. Nothing was left untouched or unquestioned.

All of these programs, which were implemented in under 12 months, resulted in a dramatic impact on revenue and COGS and therefore on gross profit and EBITDA in addition to liberating cash. Outcomes included:

• A 6-point improvement in gross profit
• Direct labor declined 18%
• Indirect labor dropped 16%
• Waste was reduced $596K
• Manufacturing overhead was decreased $638K
• WIP was reduced 23%
• Raw materials declined 21%

These results not only liberated cash but also provided space for a completely new product category introduction.

Turnaround, Sales & Marketing, Board, M&A, Interim Management

An EGI Advisor was retained as interim President by the owners of a Canadian window fashions manufacturer with an initial mandate to liquidate this start-up operation that had accumulated losses of US$22 Million.

A budget of US$3.5 Million had been established for the shutdown process. However, after an in-depth, firsthand investigation of the Canadian market, the EGI Advisor developed a strategic plan and persuaded the ownership to continue the business. While devising and implementing marketing and promotional programs, management focused on national accounts and key customers within profitable products and channels and leveraging the brand name. EGI also introduced game-changing sales and marketing programs for major retailers that produced immediate and dramatic results. The Company posted a profit within eight months.

While this turnaround was underway and prompted by EGI, ownership agreed to sell the Company, which was operated under an option, and the EGI Advisor was able to “flip” it within 24 hours by exercising an option for only US$300,000 and selling the business for US$5.6 Million, realizing a profit of US$5.3 Million instead of the US$3.5 Million shutdown cost. The successful turnaround and subsequent divestiture only required 14 months.

Complex Turnaround, Supply Chain, Sales & Marketing, Interim Management

An EGI Advisor was recommended by a New York investment advisory firm to the parent holding company with a portfolio of nine companies. The EGI Advisor was subsequently hired as interim President of the largest of the nine companies with the approval of the holding company Board and its PEG owner, an international publicly traded investment firm. The holding Company had revenues in excess of $600 Million and decimated financial performance, primarily attributed to excess leverage and operating issues at its largest flagship company. This Company manufactured custom-engineered metal buildings and had approximately $300 Million in revenue. A complex bankruptcy loomed involving all nine companies, and the survival of the flagship and therefore parent Company was uncertain. To make matters more challenging, the backdrop was an entire industry in total chaos due to worldwide fluctuations in steel prices and disruption in supply.

The flagship Company faced a series of equally critical problems:

Success was achieved by mobilizing internal resources and supplementing them with operating expertise from EGI. An EGI Advisor served as Vice President of Marketing and coordinated the Company’s relaunch. Another Advisor stepped in as Vice President of Engineering to totally refocus this organization to achieve accurate designs and on-time delivery at reduced costs resulting in a remarkable customer relations victory. Two EGI Associates provided strategic financial analysis that was crucial to success. Additionally, an EGI Associate conducted face-to-face customer surveys and performed market research while another colleague analyzed organizational consolidation opportunities.

All these problematic issues were addressed as follows:

The EGI Team orchestrated a very successful turnaround of the flagship entity over a 21-month period and thereby saved the parent holding Company. The flagship Company had a highly effective relaunch and secured record performance allowing the holding company to ultimately exit bankruptcy. Shortly thereafter, the parent Company sold for a twelve multiple to a Fortune 500 industry player.

Advisor, Sales & Marketing, Operations, Lean, Supply Chain

EGI was engaged to achieve a comprehensive company transformation of a niche ready-to-finish furniture manufacturer with nationwide distribution utilizing a dealer network serviced by a captive and co-managed transportation firm. This required addressing every line item on the P&L and Balance Sheet.

EGI implemented sweeping sales and marketing initiatives, re-launched the sales group and initiated first-time, industry-wide programs to reposition product perception from low-priced, low-cost to higher margin customizable products. This was accomplished through the addition of unique product offerings, technology accessories, additional wood species, point-of-sale programs and marketing materials to provide the Company’s dealers incremental sales. As a result of the operational efficiencies gained, the Company was also able to create a totally new product offering in just six weeks and successfully launch a test market program with a major big box retailer for nationwide distribution that would increase Company sales by over 20% in only six months.

EGI also employed an array of operational optimization techniques including its Lean Business Template; value analysis and value engineering; value stream mapping; transportation, logistics, and supply chain redetermination; systems enhancements; and business process evaluations to identify and exploit opportunities and to address struggle points. Each and every point-of-cost or inefficiency throughout the enterprise delivery system, including transportation, supply chain, and manufacturing, was examined. Based on sales analysis, marketplace considerations, and bottom-line profitability, 250 of 550 SKU’s were eliminated. The remaining products were subjected to exhaustive value engineering while considering labor costs, producibility, and customer preferences. Then the transportation and supply chain were totally reset. Nothing was left untouched or unquestioned.

All of these programs, which were implemented in under 12 months, resulted in a dramatic impact on revenue and COGS and therefore on gross profit and EBITDA in addition to liberating cash. Outcomes included:

• A 6-point improvement in gross profit
• Direct labor declined 18%
• Indirect labor dropped 16%
• Waste was reduced $596K
• Manufacturing overhead was decreased $638K
• WIP was reduced 23%
• Raw materials declined 21%

These results not only liberated cash but also provided space for a completely new product category introduction.

Turnaround, Interim Management, Sales & Marketing, Finance

An EGI Advisor was engaged by the owners as interim President of the Company, a privately-held window coverings business with sales over $100 Million. This vertically-integrated business sold multiple product lines direct to the retail trade.

The Company slipped into an underperforming situation after the previous President departed, was in need of cash and debt reduction, and had been given only six months by the bank to achieve results. A new strategic plan developed by the EGI Advisor focused the management team on profitable sales, balance sheet management, cost reduction, and supply chain as well as breakthrough marketing initiatives. The team achieved:

• 10% operating profit in the first year
• Generated significant free cash flow in the first year
• Reduced expenses by $12 Million
• Lowered inventory by $15 Million
• Launched a major retailer account at $10 Million in annual sales
• Opened a major DIY account with projected annual sales of $50 Million
• Introduced a new product with $7 Million in annual gross profit

The Company attained low-cost producer status in many categories by reducing cost of goods sold through a Cost Busters Program. This comprehensive and focused strategy led to the most profitable year in the Company’s 25-year history.

Advisor, M&A, Restructuring, Growth

An EGI Advisor served as General Manager of a nationally branded two-step manufacturer and marketer of vertical blinds with sales in excess of $100 Million to refocus and redirect both the Commercial and National Accounts business units. The entity was owned by a major conglomerate.

The EGI Advisor accomplished the key objective with National Accounts by strengthening the partnership with two major U.S. retailers through exclusive marketing initiatives that achieved strong, mutually profitable growth. In the Commercial business, critical achievements included merging several functions of this division into the core corporate structure as well as implementation of a new customer service system that greatly improved responsiveness.

In conjunction with energizing the performance of these two business units, EGI’s Advisor played a central role in a divestiture for more than $90 Million.

M&A, Board, Information Management, Operations, Lean

An EGI Advisor was hired by a PEG in the initial stage of investing in a building supplies business to serve as interim President and Board member of one of its portfolio companies when the incumbent President experienced health issues during the acquisition process.

EGI’s Advisor immediately focused the management team on fundamental business opportunities to improve profitability, including creating and responding to margin analysis and customer segmentation evaluation as well as taking selective price increases. The EGI Advisor also brought in an Industrial Engineer from EGI to introduce Lean manufacturing techniques, while attacking weak information systems that were placing artificial constraints on the Company. The customer service system was redesigned to be more customer-friendly, to decrease order entry and manufacturing errors, to lower process time, and, importantly, to facilitate expanded real-time pricing. The production control module was enhanced in conjunction with optimizing manufacturing layout and production flow to boost productivity and minimize throughput time. Also, the inventory control module was modified to dramatically reduce raw material and work-in-process inventory.

The EGI Advisor positioned the Company for success by sharpening its focus on sales opportunities, re-designing business systems and processes, and redirecting IT development. As a result, the Company was successfully divested to a strategic buyer in 13 months, at a triple-digit ROI.

Complex Wind Down, Asset Recovery, Forensic, Operations

The Board of a major Southeast cell tower design and construction company engaged a team of EGI Advisors when the management group walked out to start a competitive company and took virtually the entire 60 person workforce with them.

EGI assumed full command of the Company. As the crisis unfolded, including executives accused of wrongdoing and lawsuits filed in two states, crisis activities encompassed a strong forensic component; assistance in legal preparation; staffing all critical functional positions, including COO, CFO, Receivables/Payables Manager, HR Manager, Customer Service Manager, and Supply Chain Manager; contract management; project management and closeout, including completing existing construction and installation contracts; tax filings; benefits management; customer interface and negotiations; legal interface; fleet management and disposal; and a nationwide asset auction.

Results included the orderly wind down of the Company with EGI minimized professional costs, while achieving collections of $4.7 Million, raising $1.1 Million through an asset sale, and realizing income through selling and relocating a metal building, while ultimately avoiding litigation and regulatory issues with the estate.

M&A, Family Business, Advisor, Information Management, Capital Raising

The Company was founded as a refiner of silver from secondary sources, principally jewelry scrap, to be an alternative refiner to the then industry leader. As the jewelry industry welcomed another refiner, revenues grew rapidly. The Company also began to make silver recovery machines for the photo-processing industry and followed that industry’s transformation from wholesale, large over-night labs to in-store photo processing. The Company provided the machines, in-store services, and refining of harvested silver by-products and quickly became one of three principal players in the business. It also added the manufacturing of silver grain, sheet, and wire products to its capabilities in order to obtain “value-added” margins.

When an EGI Advisor was introduced to the Company, it was generating about $45 Million in revenues (less than $10 Million was value-added revenues) and about $800K in EBITDA. The Company was financing itself with bank debt personally guaranteed by the principal shareholders. After an analysis by the EGI Advisor of the Company’s financial structure, finance staff, IT capabilities and systems deficiencies, an aggressive new multi-year strategy was devised and the EGI Advisor was retained to assist the CEO in executing the new plan along with systems and technology upgrades. Initial activities involved hiring a CFO and improving the financial reporting and business intelligence systems. Next, financial resources were broadened by bringing on new debt providers, a revolver, and term and acquisition finance at lower costs and without shareholder guarantees. Then, capital expenditures were executed to broaden the Company’s product line to include higher margin industrial products.

The legacy business of silver recovery for the photo industry was changing due to the digitization of photography. The EGI Advisor recognized a “last man standing” strategy and led the acquisition of the principal competitor at an advantageous price with 100% debt finance. This acquisition led to considerable market share gains, pricing power, and the stripping of duplicate SG&A costs. The Company grew to almost $200 Million and EBITDA of about $5.5 Million, a seven-fold increase. The company invested to add gold refining and gold sputtering target and other products to broaden its customer base, increase margins, and further diversify. These new businesses and the Company’s growth had greatly increased the financing requirements of net working capital at a time when consolidation in the banking industry had reduced the number of precious metal banks, thus increasing the cost of financing.

The EGI Advisor then helped the company hire a new COO to report to the CEO in order to lead efforts to execute Lean manufacturing and other cost savings initiatives and to broaden the company’s selling efforts globally. At the same time, the EGI Advisor was asked to lead the campaign to sell the Company. The EGI Advisor prepared selling documents, identified potential global materials science manufacturing companies, initiated contact, led buyer visits and interviews and coordinated with the company’s legal counsel including the preparation of LOIs. A total of 12 NDAs were distributed leading to four buyer visits and three initial LOIs. Bidding was continued with two buyers and a final LOI was entered into five months later. The EGI Advisor negotiated the Stock Purchase Agreement with the Buyer and represented the Seller in the Buyer’s due diligence, including the creation of an on-line data room with over 22,000 pages allowing the Buyer to do most due diligence off-site and providing for a written record of all due diligence for use in representation and warranty matters under the SPA.

The final all cash for stock transaction was at greater than seven times EBITDA. The Buyer retained all the Company facilities and all but three employees.

M&A, Family Business, Advisor, Information Management, Capital Raising

The Company was founded as a refiner of silver from secondary sources, principally jewelry scrap, to be an alternative refiner to the then industry leader. As the jewelry industry welcomed another refiner, revenues grew rapidly. The Company also began to make silver recovery machines for the photo-processing industry and followed that industry’s transformation from wholesale, large over-night labs to in-store photo processing. The Company provided the machines, in-store services, and refining of harvested silver by-products and quickly became one of three principal players in the business. It also added the manufacturing of silver grain, sheet, and wire products to its capabilities in order to obtain “value-added” margins.

When an EGI Advisor was introduced to the company, it was generating about $45 Million in revenues (less than $10 Million was value-added revenues) and about $800K in EBITDA. The Company was financing itself with bank debt personally guaranteed by the principal shareholders. After an analysis by the EGI Advisor of the company’s financial structure, finance staff, IT capabilities and systems deficiencies, an aggressive new multi-year strategy was devised and the EGI Advisor was retained to assist the CEO in executing the new plan along with systems and technology upgrades. Initial activities involved hiring a CFO and improving the financial reporting and business intelligence systems. Next, financial resources were broadened by bringing on new debt providers, a revolver, and term and acquisition finance at lower costs and without shareholder guarantees. Then, capital expenditures were executed to broaden the Company’s product line to include higher margin industrial products.

The legacy business of silver recovery for the photo industry was changing due to the digitization of photography. The EGI Advisor recognized a “last man standing” strategy and led the acquisition of the principal competitor at an advantageous price with 100% debt finance. This acquisition led to considerable market share gains, pricing power, and the stripping of duplicate SG&A costs. The Company grew to almost $200 Million and EBITDA of about $5.5 Million, a seven-fold increase. The Company invested to add gold refining and gold sputtering target and other products to broaden its customer base, increase margins, and further diversify. These new businesses and the Company’s growth had greatly increased the financing requirements of net working capital at a time when consolidation in the banking industry had reduced the number of precious metal banks, thus increasing the cost of financing.

The EGI Advisor then helped the Company hire a new COO to report to the CEO in order to lead efforts to execute Lean manufacturing and other cost savings initiatives and to broaden the company’s selling efforts globally. At the same time, the EGI Advisor was asked to lead the campaign to sell the Company. The EGI Advisor prepared selling documents, identified potential global materials science manufacturing companies, initiated contact, led buyer visits and interviews and coordinated with the Company’s legal counsel including the preparation of LOIs. A total of 12 NDAs were distributed leading to four buyer visits and three initial LOIs. Bidding was continued with two buyers and a final LOI was entered into five months later. The EGI Advisor negotiated the Stock Purchase Agreement with the Buyer and represented the Seller in the Buyer’s due diligence, including the creation of an on-line data room with over 22,000 pages allowing the Buyer to do most due diligence off-site and providing for a written record of all due diligence for use in representation and warranty matters under the SPA.

The final all cash for stock transaction was at greater than seven times EBITDA. The Buyer retained all the Company facilities and all but three employees.

M&A, Capital Raising, Finance Advisor, Co-investing, Board

The Company retained an EGI Advisor during its search for equity. The Company was founded as an importer of cotton health/beauty products to be sold into the U.S. market. It subsequently built its own plant and opened with 25 employees. Annual sales then grew to $5 Million, but profits were never realized and the Company remained No. 7 in a seven-competitor industry. The EGI Advisor believed the industry was perfect for consolidation. EGI’s Advisor invested in the Company in return for a 25% ownership stake, a Board seat, and the role of Executive VP/CFO to focus on strategic growth.

Believing it was necessary for the Company to become a more competitive player in the industry before moving forward with consolidation plans, the EGI Advisor’s capital contribution was used to increase production capacity and expand the product line as well as relaunch the Company’s marketing programs. After just a year, sales grew 40%, with breakeven profits and cash flow. At this point, the EGI Advisor decided to start consolidating the industry. A major European firm agreed to merge its U.S. subsidiary with the Company, realizing that the Company was beginning to move ahead of it in market share. Also, another European-based firm agreed to merge its U.S. operations with the Company. As a result, three plants were combined into two and three sets of costs associated with SG&A expenses were combined into one. The Company then invested in automated production lines to reduce labor costs and clearly owned the most modern, efficient plants in the industry. Revenues tripled in two years.

Meanwhile, a major U.S. competitor accumulated three other industry players, but then struggled with the consolidation before being acquired by a private equity group. This competitor had purchased the cotton health/beauty business of a major medical products group and became the largest supplier in the Canadian market. As a result, the competitor was suffering from a high debt load, old equipment and capital constraints and despite restructuring remained victim to competition from the company where EGI’s Advisor was involved. The EGI Advisor initiated contact and the competitor agreed to sell its $85 Million revenue related business (including six plants), inventory, and receivables for $18 Million cash.

The net result: The EGI Advisor led his client to become the North American giant in the cotton business with $120 Million in sales, and four times larger than the only remaining competitor. EGI’s Advisor then sold all of his interests to existing shareholders, having taken the business from an enterprise value of $4 Million to $48 Million over the seven year period.

M&A, Capital Raising, Finance Advisor, Co-investing, Board

The Company retained an EGI Advisor during its search for equity. The Company was founded as an importer of cotton health/beauty products to be sold into the U.S. market. It subsequently built its own plant and opened with 25 employees. Annual sales then grew to $5 Million, but profits were never realized and the Company remained No. 7 in a seven-competitor industry. The EGI Advisor believed the industry was perfect for consolidation. EGI’s Advisor invested in the Company in return for a 25% ownership stake, a Board seat, and the role of Executive VP/CFO to focus on strategic growth.

Believing it was necessary for the Company to become a more competitive player in the industry before moving forward with consolidation plans, the EGI Advisor’s capital contribution was used to increase production capacity and expand the product line as well as relaunch the Company’s marketing programs. After just a year, sales grew 40%, with breakeven profits and cash flow. At this point, the EGI Advisor decided to start consolidating the industry. A major European firm agreed to merge its U.S. subsidiary with the Company, realizing that the Company was beginning to move ahead of it in market share. Also, another European-based firm agreed to merge its U.S. operations with the Company. As a result, three plants were combined into two and three sets of costs associated with SG&A expenses were combined into one. The Company then invested in automated production lines to reduce labor costs and clearly owned the most modern, efficient plants in the industry. Revenues tripled in two years.

Meanwhile, a major U.S. competitor accumulated three other industry players, but then struggled with the consolidation before being acquired by a private equity group. This competitor had purchased the cotton health/beauty business of a major medical products group and became the largest supplier in the Canadian market. As a result, the competitor was suffering from a high debt load, old equipment and capital constraints and despite restructuring remained victim to competition from the company where EGI’s Advisor was involved. The EGI Advisor initiated contact and the competitor agreed to sell its $85 Million revenue related business (including six plants), inventory, and receivables for $18 Million cash.

The net result: The EGI Advisor led his client to become the North American giant in the cotton business with $120 Million in sales, and four times larger than the only remaining competitor. EGI’s Advisor then sold all of his interests to existing shareholders, having taken the business from an enterprise value of $4 Million to $48 Million over the seven year period.

Business Development, Turnaround, Financial Advisory

A leading U.S. manufacturer of food service and retail fixtures and dealer of related equipment for national restaurant chains such as Dunkin Donuts, Papa Johns and Burger King, and big-box retailers including WalMart, was experiencing a crisis and possible liquidation attributed to plummeting sales and EBITDA coupled with rising costs. The Company had a challenging governance structure with an independent Board of Directors and multiple lenders who were also the shareholders. EGI was hired to complete a comprehensive evaluation on both a top-down and bottom-up basis. EGI’s assessment clearly delineated all aspects of the available options, including: a cash-neutral liquidation, a divestiture estimated at $10 to $12 Million, and a turnaround to relaunch and save the Company. The turnaround scenario was predicated on specific courses of action and included investment, ROI, and projected terminal value metrics.

The turnaround alternative was selected by the stakeholders to position the Company for an exit event at maximum value. EGI transitioned from an advisory role to that of interim management, ultimately providing a CEO, CFO, Vice President Sales and Marketing, and Vice President of Engineering. EGI divested an idle plant for well over $1 Million, achieved $200,000 in risk management savings, and reviewed and overhauled all critical business processes of the Company while effecting a cultural shift throughout the organization to create a platform for the Company relaunch and long-term growth. Examples of business critical actions implemented by EGI included:

• Sales and Marketing – Provided a vision and value statement as well as a filter for pursuit of growth opportunities. Upgraded the sales team by replacing 30% of staff. Emphasized the importance of customer face time as well as analysis and metrics to manage by the numbers. Made new accounts a top priority. Successfully implemented sales contests to drive performance, energy, and results.
• Engineering – Upgraded personnel and implemented new software platforms to improve engineering and manufacturing productivity, material utilization, and reduce errors.
• Manufacturing – Closed satellite plant and relocated office to centralize all operations at the flagship operation. Introduced both an independent quality department and an industrial engineering function. Implemented a Master Schedule that encompassed sales, engineering, manufacturing, and shipping. Reduced material consumption and managed labor as a variable cost. These actions quickly and dramatically improved gross profit.
• Finance – Renamed the Finance Department to Business Intelligence to reflect its new role of providing meaningful, actionable reports with recommendations and proactive intervention.
• IT – Developed a corporate systems strategy and, more specifically, implemented short-term payback tools such as a spreadsheet to provide capacity planning as well as a spreadsheet to specify manufacturing man-loading. Streamlined and optimized all business systems in conjunction with implementing Lean office.
• Human Resources – The single most important success was effecting a cultural shift to produce an environment of empowerment and entrepreneurship. Introduced a bonus system that provided a sharp focus and common goal.

Over a 12-month period under EGI’s management, the sales run rate was increased from $55 Million to over $70 Million, while the gross margin was improved by five points, with an EBITDA plan in excess of $3 Million and a projected terminal value of $30 to $35 Million. EGI then participated in the recruitment of a new management team from within the industry to take the Company to the next level based on the platform that had been effected by EGI. The Company was soon after divested for a 10+ multiple.

Turnaround, Sales & Marketing, Board, M&A, Interim Management

An EGI Advisor was brought into a privately-held major branded toy company as interim President and Chief Operating Officer and soon aligned himself with, and retained, the outgoing CFO who subsequently became part of EGI. The Company designed, manufactured, and marketed exclusive collectible dolls, but had dated systems, controls, and marketing strategies. As a result, the Company was well over $25 Million in debt and had a negative net worth of close to $15 Million.

Despite a looming bankruptcy, the EGI Advisor worked with the two main shareholders to quickly achieve a dramatic turnaround by exiting unprofitable product lines, developing two new product umbrellas, entering new channels of distribution, re-launching all merchandising materials, and obtaining licenses with Disney, Hallmark and Sony. Key milestone accomplishments achieved over less than 18 months included:

• Negotiating a restructuring of debt
• Increasing sales by 32%
• Elevating gross profit eight points

The Company was then sold out of Chapter 11 in a 363 sale at $16 Million for 80% ownership, with the balance of 20% remaining with the original shareholders. Unsecured creditors were paid 85 cents on the dollar.

Turnaround, Sales & Marketing, Board, M&A, Interim Management

An EGI Advisor was retained as interim President by the owners of a Canadian window fashions manufacturer with an initial mandate to liquidate this start-up operation that had accumulated losses of US$22 Million.

A budget of US$3.5 Million had been established for the shutdown process. However, after an in-depth, firsthand investigation of the Canadian market, the EGI Advisor developed a strategic plan and persuaded the ownership to continue the business. While devising and implementing marketing and promotional programs, management focused on national accounts and key customers within profitable products and channels and leveraging the brand name. EGI also introduced game-changing sales and marketing programs for major retailers that produced immediate and dramatic results. The Company posted a profit within eight months.

While this turnaround was underway and prompted by EGI, ownership agreed to sell the Company, which was operated under an option, and the EGI Advisor was able to “flip” it within 24 hours by exercising an option for only US$300,000 and selling the business for US$5.6 Million, realizing a profit of US$5.3 Million instead of the US$3.5 Million shutdown cost. The successful turnaround and subsequent divestiture only required 14 months.

Advisor, Board, Co-investing, Interim Management, Turnaround, M&A

An EGI Advisor was engaged by a private equity group to provide leadership to an unprofitable environmental engineering and construction business in its acquisition and spin-off from a Fortune 500 company and then serve as active Vice Chairman as well as interim Vice President to address specific issues. The mission was to effect a turnaround and implement growth strategies.

The EGI Advisor was selected as an operating manager to play a key role in due diligence, while simultaneously developing a re-organization plan and Company relaunch strategy. A restructuring effort and carve-out plan was implemented immediately after closing, assuring profitability from inception. Elements crucial to success were to lower the break-even point, mentor the new and inexperienced management team, and execute a well-conceived strategic business development plan. This engagement included guiding the installation of a stand-alone entrepreneurial infrastructure subsequent to the spin-off from a Fortune 500 company while providing leadership to help reposition the Company in the marketplace. Importance was placed on emphasizing commercial and industrial construction, improving costing procedures, and creating new pricing strategies. A critically impactful accomplishment by the EGI Advisor was assisting in vastly strengthening the Project Management function to substantially reduce cost-to-completion and penalty fees.

The EGI Advisor also relocated the Company headquarters to save on costs and taxes.EGI’s Advisor remained as an investor and on the Board of Directors until all parties successfully exited this lucrative investment with a divestiture to a PEG.

M&A, Capital Raising, Finance Advisor, Co-investing, Board

The Company retained an EGI Advisor during its search for equity. The Company was founded as an importer of cotton health/beauty products to be sold into the U.S. market. It subsequently built its own plant and opened with 25 employees. Annual sales then grew to $5 Million, but profits were never realized and the Company remained No. 7 in a seven-competitor industry. The EGI Advisor believed the industry was perfect for consolidation. EGI’s Advisor invested in the Company in return for a 25% ownership stake, a Board seat, and the role of Executive VP/CFO to focus on strategic growth.

Believing it was necessary for the Company to become a more competitive player in the industry before moving forward with consolidation plans, the EGI Advisor’s capital contribution was used to increase production capacity and expand the product line as well as relaunch the Company’s marketing programs. After just a year, sales grew 40%, with breakeven profits and cash flow. At this point, the EGI Advisor decided to start consolidating the industry. A major European firm agreed to merge its U.S. subsidiary with the Company, realizing that the Company was beginning to move ahead of it in market share. Also, another European-based firm agreed to merge its U.S. operations with the Company. As a result, three plants were combined into two and three sets of costs associated with SG&A expenses were combined into one. The Company then invested in automated production lines to reduce labor costs and clearly owned the most modern, efficient plants in the industry. Revenues tripled in two years.

Meanwhile, a major U.S. competitor accumulated three other industry players, but then struggled with the consolidation before being acquired by a private equity group. This competitor had purchased the cotton health/beauty business of a major medical products group and became the largest supplier in the Canadian market. As a result, the competitor was suffering from a high debt load, old equipment and capital constraints and despite restructuring remained victim to competition from the company where EGI’s Advisor was involved. The EGI Advisor initiated contact and the competitor agreed to sell its $85 Million revenue related business (including six plants), inventory, and receivables for $18 Million cash.

The net result: The EGI Advisor led his client to become the North American giant in the cotton business with $120 Million in sales, and 4 times larger than the only remaining competitor. EGI’s Advisor then sold all of his interests to existing shareholders, having taken the business from an enterprise value of $4 Million to $48 Million over the seven year period.

M&A, Capital Raising, Finance Advisor, Co-investing, Board

The Company retained an EGI Advisor during its search for equity. The Company was founded as an importer of cotton health/beauty products to be sold into the U.S. market. It subsequently built its own plant and opened with 25 employees. Annual sales then grew to $5 Million, but profits were never realized and the Company remained No. 7 in a seven-competitor industry. The EGI Advisor believed the industry was perfect for consolidation. EGI’s Advisor invested in the Company in return for a 25% ownership stake, a Board seat, and the role of Executive VP/CFO to focus on strategic growth.

Believing it was necessary for the Company to become a more competitive player in the industry before moving forward with consolidation plans, the EGI Advisor’s capital contribution was used to increase production capacity and expand the product line as well as relaunch the Company’s marketing programs. After just a year, sales grew 40%, with breakeven profits and cash flow. At this point, the EGI Advisor decided to start consolidating the industry. A major European firm agreed to merge its U.S. subsidiary with the Company, realizing that the Company was beginning to move ahead of it in market share. Also, another European-based firm agreed to merge its U.S. operations with the Company. As a result, three plants were combined into two and three sets of costs associated with SG&A expenses were combined into one. The Company then invested in automated production lines to reduce labor costs and clearly owned the most modern, efficient plants in the industry. Revenues tripled in two years.

Meanwhile, a major U.S. competitor accumulated three other industry players, but then struggled with the consolidation before being acquired by a private equity group. This competitor had purchased the cotton health/beauty business of a major medical products group and became the largest supplier in the Canadian market. As a result, the competitor was suffering from a high debt load, old equipment and capital constraints and despite restructuring remained victim to competition from the company where EGI’s Advisor was involved. The EGI Advisor initiated contact and the competitor agreed to sell its $85 Million revenue related business (including six plants), inventory, and receivables for $18 Million cash.

The net result: The EGI Advisor led his client to become the North American giant in the cotton business with $120 Million in sales, and four times larger than the only remaining competitor. EGI’s Advisor then sold all of his interests to existing shareholders, having taken the business from an enterprise value of $4 Million to $48 Million over the seven year period.

M&A, Family Business, Advisor, Information Management, Capital Raising

The Company was founded as a refiner of silver from secondary sources, principally jewelry scrap, to be an alternative refiner to the then industry leader. As the jewelry industry welcomed another refiner, revenues grew rapidly. The Company also began to make silver recovery machines for the photo-processing industry and followed that industry’s transformation from wholesale, large over-night labs to in-store photo processing. The Company provided the machines, in-store services, and refining of harvested silver by-products and quickly became one of three principal players in the business. It also added the manufacturing of silver grain, sheet, and wire products to its capabilities in order to obtain “value-added” margins.

When an EGI Advisor was introduced to the Company, it was generating about $45 Million in revenues (less than $10 Million was value-added revenues) and about $800K in EBITDA. The Company was financing itself with bank debt personally guaranteed by the principal shareholders. After an analysis by the EGI Advisor of the Company’s financial structure, finance staff, IT capabilities and systems deficiencies, an aggressive new multi-year strategy was devised and the EGI Advisor was retained to assist the CEO in executing the new plan along with systems and technology upgrades. Initial activities involved hiring a CFO and improving the financial reporting and business intelligence systems. Next, financial resources were broadened by bringing on new debt providers, a revolver, and term and acquisition finance at lower costs and without shareholder guarantees. Then, capital expenditures were executed to broaden the Company’s product line to include higher margin industrial products.

The legacy business of silver recovery for the photo industry was changing due to the digitization of photography. The EGI Advisor recognized a “last man standing” strategy and led the acquisition of the principal competitor at an advantageous price with 100% debt finance. This acquisition led to considerable market share gains, pricing power, and the stripping of duplicate SG&A costs. The Company grew to almost $200 Million and EBITDA of about $5.5 Million, a seven-fold increase. The Company invested to add gold refining and gold sputtering target and other products to broaden its customer base, increase margins, and further diversify. These new businesses and the Company’s growth had greatly increased the financing requirements of net working capital at a time when consolidation in the banking industry had reduced the number of precious metal banks, thus increasing the cost of financing.

The EGI Advisor then helped the Company hire a new COO to report to the CEO in order to lead efforts to execute Lean manufacturing and other cost savings initiatives and to broaden the Company’s selling efforts globally. At the same time, the EGI Advisor was asked to lead the campaign to sell the Company. The EGI Advisor prepared selling documents, identified potential global materials science manufacturing companies, initiated contact, led buyer visits and interviews and coordinated with the Company’s legal counsel including the preparation of LOIs. A total of 12 NDAs were distributed leading to four buyer visits and three initial LOIs. Bidding was continued with two buyers and a final LOI was entered into five months later. The EGI Advisor negotiated the Stock Purchase Agreement with the Buyer and represented the Seller in the Buyer’s due diligence, including the creation of an on-line data room with over 22,000 pages allowing the Buyer to do most due diligence off-site and providing for a written record of all due diligence for use in representation and warranty matters under the SPA.

The final all cash for stock transaction was at greater than seven times EBITDA. The Buyer retained all the Company facilities and all but three employees.

Sell-Side Advisory, Family Business

EGI was hired as an exclusive sell-side Advisor to an established service and technology provider in the continuing education field. Business sectors served included healthcare, pharmaceutical, and financial companies. Our Client was a U.S. family business that provided services on a worldwide basis.

The EGI Advisor focused on 50 targeted high-potential buyers. As a result, 40 NDAs and CIMs were issued. This led to eight negotiated LOIs and ultimately seven management meetings. We selected three bidders for the final round. The total lapsed time for the entire process was six months.

This transaction netted a strong multiple while the Buyer retained our Client’s CEO in the same position and maintained all other employees with expanded duties and compensation. The CEO received equity options as did several of his staff.

Sell-Side M&A

During the first half of 2019, the global economy and marketplace, including M&A activity, were rocked by Covid-19. Against this backdrop, EGI assumed two simultaneous and substantial sell-side engagements representing owner-founders.

EGI operating and financial managers advised our Clients on the implementation of strategic and defensive responses to the unprecedented environment in order to preserve and grow market value.

As a result, our Clients adapted to the prevailing difficult economic circumstances and not only maintained performance levels but improved their EBITDA. EGI successfully closed both transactions in the first half of 2020. Thanks to a team effort, total EBITDA multiples of 11 and 9.5 were achieved.

M&A, Family Business, Advisor, Information Management, Capital Raising

The Company was founded as a refiner of silver from secondary sources, principally jewelry scrap, to be an alternative refiner to the then industry leader. As the jewelry industry welcomed another refiner, revenues grew rapidly. The Company also began to make silver recovery machines for the photo-processing industry and followed that industry’s transformation from wholesale, large over-night labs to in-store photo processing. The Company provided the machines, in-store services, and refining of harvested silver by-products and quickly became one of three principal players in the business. It also added the manufacturing of silver grain, sheet, and wire products to its capabilities in order to obtain “value-added” margins.

When an EGI Advisor was introduced to the company, it was generating about $45 Million in revenues (less than $10 Million was value-added revenues) and about $800K in EBITDA. The company was financing itself with bank debt personally guaranteed by the principal shareholders. After an analysis by the EGI Advisor of the Company’s financial structure, finance staff, IT capabilities and systems deficiencies, an aggressive new multi-year strategy was devised and the EGI Advisor was retained to assist the CEO in executing the new plan along with systems and technology upgrades. Initial activities involved hiring a CFO and improving the financial reporting and business intelligence systems. Next, financial resources were broadened by bringing on new debt providers, a revolver, and term and acquisition finance at lower costs and without shareholder guarantees. Then, capital expenditures were executed to broaden the Company’s product line to include higher margin industrial products.

The legacy business of silver recovery for the photo industry was changing due to the digitization of photography. The EGI Advisor recognized a “last man standing” strategy and led the acquisition of the principal competitor at an advantageous price with 100% debt finance. This acquisition led to considerable market share gains, pricing power, and the stripping of duplicate SG&A costs. The company grew to almost $200 Million and EBITDA of about $5.5 Million, a seven-fold increase. The Company invested to add gold refining and gold sputtering target and other products to broaden its customer base, increase margins, and further diversify. These new businesses and the company’s growth had greatly increased the financing requirements of net working capital at a time when consolidation in the banking industry had reduced the number of precious metal banks, thus increasing the cost of financing.

The EGI Advisor then helped the Company hire a new COO to report to the CEO in order to lead efforts to execute Lean manufacturing and other cost savings initiatives and to broaden the Company’s selling efforts globally. At the same time, the EGI Advisor was asked to lead the campaign to sell the company. The EGI Advisor prepared selling documents, identified potential global materials science manufacturing companies, initiated contact, led buyer visits and interviews and coordinated with the Company’s legal counsel including the preparation of LOIs. A total of 12 NDAs were distributed leading to four buyer visits and three initial LOIs. Bidding was continued with two buyers and a final LOI was entered into five months later. The EGI Advisor negotiated the Stock Purchase Agreement with the Buyer and represented the Seller in the Buyer’s due diligence, including the creation of an on-line data room with over 22,000 pages allowing the Buyer to do most due diligence off-site and providing for a written record of all due diligence for use in representation and warranty matters under the SPA.

The final all cash for stock transaction was at greater than seven times EBITDA. The Buyer retained all the Company facilities and all but three employees.

Turnaround, Interim Management, Sales & Marketing, Finance

An EGI Advisor was engaged by the owners as interim President of the Company, a privately-held window coverings business with sales over $100 Million. This vertically-integrated business sold multiple product lines direct to the retail trade.

The Company slipped into an underperforming situation after the previous President departed, was in need of cash and debt reduction, and had been given only six months by the bank to achieve results. A new strategic plan developed by the EGI Advisor focused the management team on profitable sales, balance sheet management, cost reduction, and supply chain as well as breakthrough marketing initiatives. The team achieved:

• 10% operating profit in the first year
• Generated significant free cash flow in the first year
• Reduced expenses by $12 Million
• Lowered inventory by $15 Million
• Launched a major retailer account at $10 Million in annual sales
• Opened a major DIY account with projected annual sales of $50 Million
• Introduced a new product with $7 Million in annual gross profit

The Company attained low-cost producer status in many categories by reducing cost of goods sold through a Cost Busters Program. This comprehensive and focused strategy led to the most profitable year in the Company’s 25-year history.

Turnaround, Sales & Marketing, Board, M&A, Interim Management

An EGI Advisor was retained as interim President by the owners of a Canadian window fashions manufacturer with an initial mandate to liquidate this start-up operation that had accumulated losses of US$22 Million.

A budget of US$3.5 Million had been established for the shutdown process. However, after an in-depth, firsthand investigation of the Canadian market, the EGI Advisor developed a strategic plan and persuaded the ownership to continue the business. While devising and implementing marketing and promotional programs, management focused on national accounts and key customers within profitable products and channels and leveraging the brand name. EGI also introduced game-changing sales and marketing programs for major retailers that produced immediate and dramatic results. The Company posted a profit within eight months.

While this turnaround was underway and prompted by EGI, ownership agreed to sell the Company, which was operated under an option, and the EGI Advisor was able to “flip” it within 24 hours by exercising an option for only US$300,000 and selling the business for US$5.6 Million, realizing a profit of US$5.3 Million instead of the US$3.5 Million shutdown cost. The successful turnaround and subsequent divestiture only required 14 months.

Business Development, Turnaround, Financial Advisory

A leading U.S. manufacturer of food service and retail fixtures and dealer of related equipment for national restaurant chains such as Dunkin Donuts, Papa Johns and Burger King, and big-box retailers including WalMart, was experiencing a crisis and possible liquidation attributed to plummeting sales and EBITDA coupled with rising costs. The Company had a challenging governance structure with an independent Board of Directors and multiple lenders who were also the shareholders. EGI was hired to complete a comprehensive evaluation on both a top-down and bottom-up basis. EGI’s assessment clearly delineated all aspects of the available options, including: a cash-neutral liquidation, a divestiture estimated at $10 to $12 Million, and a turnaround to relaunch and save the company. The turnaround scenario was predicated on specific courses of action and included investment, ROI, and projected terminal value metrics.

The turnaround alternative was selected by the stakeholders to position the Company for an exit event at maximum value. EGI transitioned from an advisory role to that of interim management, ultimately providing a CEO, CFO, Vice President Sales and Marketing, and Vice President of Engineering. EGI divested an idle plant for well over $1 Million, achieved $200,000 in risk management savings, and reviewed and overhauled all critical business processes of the Company while effecting a cultural shift throughout the organization to create a platform for the Company relaunch and long-term growth. Examples of business critical actions implemented by EGI included:

• Sales and Marketing – Provided a vision and value statement as well as a filter for pursuit of growth opportunities. Upgraded the sales team by replacing 30% of staff. Emphasized the importance of customer face time as well as analysis and metrics to manage by the numbers. Made new accounts a top priority. Successfully implemented sales contests to drive performance, energy, and results.
• Engineering – Upgraded personnel and implemented new software platforms to improve engineering and manufacturing productivity, material utilization, and reduce errors.
• Manufacturing – Closed satellite plant and relocated office to centralize all operations at the flagship operation. Introduced both an independent quality department and an industrial engineering function. Implemented a Master Schedule that encompassed sales, engineering, manufacturing, and shipping. Reduced material consumption and managed labor as a variable cost. These actions quickly and dramatically improved gross profit.
• Finance – Renamed the Finance Department to Business Intelligence to reflect its new role of providing meaningful, actionable reports with recommendations and proactive intervention.
• IT – Developed a corporate systems strategy and, more specifically, implemented short-term payback tools such as a spreadsheet to provide capacity planning as well as a spreadsheet to specify manufacturing man-loading. Streamlined and optimized all business systems in conjunction with implementing Lean office.
• Human Resources – The single most important success was effecting a cultural shift to produce an environment of empowerment and entrepreneurship. Introduced a bonus system that provided a sharp focus and common goal.

Over a 12-month period under EGI’s management, the sales run rate was increased from $55 Million to over $70 Million, while the gross margin was improved by five points, with an EBITDA plan in excess of $3 Million and a projected terminal value of $30 to $35 Million. EGI then participated in the recruitment of a new management team from within the industry to take the Company to the next level based on the platform that had been effected by EGI. The Company was soon after divested for a 10+ multiple.

Advisor, Board, Co-investing, Interim Management, Turnaround, M&A

An EGI Advisor was engaged by a private equity group to provide leadership to an unprofitable environmental engineering and construction business in its acquisition and spin-off from a Fortune 500 company and then serve as active Vice Chairman as well as interim Vice President to address specific issues. The mission was to effect a turnaround and implement growth strategies.

The EGI Advisor was selected as an operating manager to play a key role in due diligence, while simultaneously developing a re-organization plan and Company relaunch strategy. A restructuring effort and carve-out plan was implemented immediately after closing, assuring profitability from inception. Elements crucial to success were to lower the break-even point, mentor the new and inexperienced management team, and execute a well-conceived strategic business development plan. This engagement included guiding the installation of a stand-alone entrepreneurial infrastructure subsequent to the spin-off from a Fortune 500 company while providing leadership to help reposition the Company in the marketplace. Importance was placed on emphasizing commercial and industrial construction, improving costing procedures, and creating new pricing strategies. A critically impactful accomplishment by the EGI Advisor was assisting in vastly strengthening the Project Management function to substantially reduce cost-to-completion and penalty fees. The EGI Advisor also relocated the Company headquarters to save on costs and taxes.

EGI’s Advisor remained as an investor and on the Board of Directors until all parties successfully exited this lucrative investment with a divestiture to a PEG.

Complex Turnaround, Supply Chain, Sales & Marketing, Interim Management

An EGI Advisor was recommended by a New York investment advisory firm to the parent holding company with a portfolio of nine companies. The EGI Advisor was subsequently hired as interim President of the largest of the nine companies with the approval of the holding company Board and its PEG owner, an international publicly traded investment firm. The holding Company had revenues in excess of $600 Million and decimated financial performance, primarily attributed to excess leverage and operating issues at its largest flagship Company. This Company manufactured custom-engineered metal buildings and had approximately $300 Million in revenue. A complex bankruptcy loomed involving all nine companies, and the survival of the flagship and therefore parent Company was uncertain. To make matters more challenging, the backdrop was an entire industry in total chaos due to worldwide fluctuations in steel prices and disruption in supply.

The flagship Company faced a series of equally critical problems:

Success was achieved by mobilizing internal resources and supplementing them with operating expertise from EGI. An EGI Advisor served as Vice President of Marketing and coordinated the Company’s relaunch. Another Advisor stepped in as Vice President of Engineering to totally refocus this organization to achieve accurate designs and on-time delivery at reduced costs resulting in a remarkable customer relations victory. Two EGI Associates provided strategic financial analysis that was crucial to success. Additionally, an EGI Associate conducted face-to-face customer surveys and performed market research while another colleague analyzed organizational consolidation opportunities.

All these problematic issues were addressed as follows:

The EGI Team orchestrated a very successful turnaround of the flagship entity over a 21-month period and thereby saved the parent holding Company. The flagship Company had a highly effective relaunch and secured record performance allowing the holding Company to ultimately exit bankruptcy. Shortly thereafter, the parent Company sold for a twelve multiple to a Fortune 500 industry player.