The Company was a $35+ million manufacturer and distributor of branded band and orchestral music instruments.
Majority of the business was sales of “student” line instruments, including clarinets, flutes, saxophones, trumpets, trombones, etc. to music dealers servicing school and band music programs.
The Company operated three U.S. manufacturing plants and a French operation that dated back to the 1700’s, making it one of the oldest continuing operating companies in France.
The sudden death of the founder left the Company without a succession plan. In addition, consistent with industry trends, the Company experienced sales and margin challenges due to the influx of low-priced instruments imported from China, reductions in school music budgets and the internet creating an efficient secondary market for used instruments.
FDP was initially engaged to develop a plan to stabilize and return the Company to profitability, to improve working capital and to develop a long-term strategy to maximize shareholder value.
FDP developed profit improvement tactics including:
–A program to outsource/import certain components and complete instruments;
–Initiating a plant consolidation strategy to reduce fixed costs;
–Restructuring sales and marketing initiatives to drive volume/focus on top line; and
–Targeting inefficiencies in the manufacturing process, to reduce WIP inventory and perform a rationalization of accessory SKUs.
Working with management and ownership, FDP ascertained that the best approach to maximize shareholder value was to either initiate an acquisition strategy, to achieve critical mass in the industry, or entertain the sale of the Company. Ownership elected to sell the Company.
As a result of turnover and lack of management depth, FDP personnel served as both interim CFO and CEO during the turnaround and sale process.
FDP was engaged to market the Company for sale, prepare an information memorandum and approach a targeted list of industry and financial buyers.
Fort Dearborn identified and implemented $5 million in immediate strategic and tactical initiatives to restore profitability and stabilize the Company.
FDP identified additional longer-term strategies with potential savings in excess of $5 million.
Fort Dearborn generated a pre-emptive bid, and ultimately sold the Company to a major instrument manufacturer.
The sale engagement was completed within four months of retention.
FDP’s deep knowledge of the Company and its accounting practices resulted in the successful defense of the purchase price in a post-closing arbitration ruling by a Big Four public accounting firm.