Company Overview
The Company was a non asset-based, third-party logistics provider serving a wide range of industries, with a strong presence in the food and bottled beverage industries.
Like many early stage growth companies, the Company was underinvested in its financial reporting systems infrastructure, and was having difficulty providing accurate and timely financial information during its new system implementation.
The senior lender was concerned about the Company’s significant growth and the corresponding working capital needs, along with the declining gross margins and the delayed financial reporting.
Engagement Overview
FDP was initially engaged by the Company to review its operations, borrowing base and financial position, prepare its financial forecasts, and assess its long-term capital requirements.
FDP’s review and analyses included:
–Detailed analysis of profitability and working capital requirements by customer and by freight mode;
–Management’s cost structure and pricing strategy;
–Structure of the Company’s sales and procurement staffs;
–Preparing a short-term cash forecast and an annual financial forecast; and
–Assisting the Company with improving its financial reporting and evaluating its CFO needs.
FDP worked closely with ownership and management to prioritize strategic initiatives and develop actionable tactics to improve profitability and cash flow:
–Initiated revised growth plan focused on higher margin services (LTL, refrigerated, intermodal and flatbed), with reasonable working capital requirements;
–Established minimum gross margin levels as a tool to develop/implement price increases and/or customer rationalization strategies; and
–Reduced sales and procurement headcount and operating expenses.
Results
As a result of Fort Dearborn’s engagement, the Company:
–Received loan extensions from its senior lender while implementing its profit improvement plan.
–Continued to achieve to its operating plan and financial forecast, and improved its profitability, liquidity and overall financial position.
–Continued to grow rapidly and was eventually sold, five years later, at a $100M valuation.