Company Overview
The Company is an importer of power tools, seating and miscellaneous workshop tools from China and Taiwan.
The Company was ESOP-owned and was primarily selling to home centers and retailers in the US.
Engagement Overview
The Company was a very successful importer of power tools from China and Taiwan. However, commodity prices, exchange rates and labor costs in those countries started to turn unfavorably against the Company.
The Company converted into an ESOP during the downturn, resulting in a highly leveraged balance sheet.
In addition to these macroeconomic trends, the reduction in business from a primary customer, Sears, caused a significant negative impact on sales.
The combination of all these negative trends, and insufficient equity to absorb cash flow losses, resulted in a severe liquidity crisis.
Fort Dearborn help identify the key risk issues that had resulted in losses in the past for the Company and, along with management, developed a plan to address identified challenges.