Growing Revenues and Profits Case Studies
Debt Restructuring and Profits - Case Study
Key points:
- Reduced debt financing needed by 70%
- Secured $500K in debt in 90 days
An established company with more than $30M in revenues was struggling to secure the financing to launch a new product that had the potential to increase revenues $10M in one year. The company estimated that they needed $1M in debt to finance the growth, yet after approaching banks and other lenders they were unable to generate sufficient interest. They completed a design and build of a few prototype units that the key customers reviewed and accepted. Furthermore, the customers liked the new product so much that they placed $7M of orders to be delivered during the next 6-9 months. The problem was that even with all of this potential, the company was unable to obtain financing, thus they saw a great opportunity slipping away from them.
The CEO hired Remergenz, Inc. to help evaluate the situation and then to assist in identifying sources of financing. During the next few months, the Remergenz team worked with the company's leaders to put together a financial model that showed in detail how the business would grow, and to more accurately determine the cash needed by the business. Multiple scenarios were developed to account for different types of contingencies, and when completed, the cash needs of the company were dropped to $300K during the first six months of the year if a few keys were followed in operating the business.
During this same time, Remergenz reached out to its network of debt providers and worked with the company to identify a few companies that would offer to provide financing. Two groups came to the company and offered to provide the financing for a higher interest rate. The company closed on one deal securing $500K in debt financing and launched its new product line.
Overall, Remergenz helped the company understand its financial needs and how to minimize the cash requirements during the next year. Remergenz then introduce the company to some debt financial companies and put together documentation to show them the opportunity in a way that provided a catalyst to completing an offer.
Disclaimer: Not all companies will achieve this level of turnaround and in this short period of time.