Specialty Apparel Manufacturer

Business Assessment: New Management and Direction

KMJ Partners was engaged by a private equity group to perform a business assessment of an existing lower middle market investment.  The business was profitable but had stalled in the marketplace and had fallen far behind the original investment case.  The company was therefore transitioning from its founder/CEO to new leadership and an interim CEO had been brought in to lead the company while a search was conducted for a replacement.

KMJ Partners assisted the interim CEO by quickly assessing the current condition of the business and identified areas requiring his immediate attention which would accelerate his involvement and effectiveness in stabilizing the company.  Working collaboratively with the management team, operational initiatives were identified and prioritized to focus on areas which would have the most impact and return.  The in depth understanding gained from the assessment process concerning the current challenges facing the business, the management team and corporate culture allowed KMJ Partners to provide significant input to the recruiter concerning the profile of the ideal CEO candidate who was ultimately hire.

Key operational initiatives were recommended by KMJ Partners and were approved by the board along with the resources to begin immediate implementation.  Even with no growth in business volumes, these initiatives would double EBITDA margins from 12% to 25% over five years, generating an additional $5m in cash flow net of investment.  KMJ Partners also developed a new vision/mission/strategy, operating plan and organizational structure for the business to drive growth for years to come.  Successful implementation of these strategic growth initiatives should deliver over $50m in incremental value to the PE firm upon exit, over four times the value of the company from when the assignment began.