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Turnaround Case Studies

Manufacturing Company Sees 5x Return - Case Study

Key points:

Remergenz's customer, a manufacturing company, had a historical track record of producing between $3M and $5M in revenues for over 25 years with an acceptable level of profit in good years. The company manufactured a patented technology that had the promise of generating more revenues and profits. Unfortunately, the business suffered for the past three years and was over $3M in debt to just one of its lenders. To compound the situation, the company’s revenues were approximately $1M for the first eight months of 2006 with a loss of over $1M. Many of the company's vendors put them on COD. Since revenues were off 67% from the previous year coupled with the company missing sales and shipment dates on a routine basis, any confidence that the lenders had in the company staying in business were quickly eroded. The company's largest shareholder and vendor was seriously considering closing down the operation, taking their losses and walking away.

The lead lender hired Remergenz, Inc. to help evaluate the situation. Remergenz built a small team to evaluate the company. During the next seven months, the Remergenz team worked with the company's leaders to improve the overall operations, sales and financial processes as well as provide additional focus and accountability with the rest of the team.

In four months during the latter part of 2006, Remergenz was able to influence the company's operation so that it was able to produce approximately $3M in revenue during 2006 - a 200% improvement over the previous eight months. In addition, the Remergenz team worked with the company's team to manage the costs and efforts such that the company nearly reached a break-even level of operating performance for the year - a gain of nearly $1M in margin.

After a total of seven months ending in first quarter of 2007, Remergenz was able to help the company increase its 2007 booked sales to $7.2M. This backlog combined with the increased efficiencies enabled the company to generate over $1M in profit during the first seven months of 2007. In addition, Remergenz worked with the company's vendors to increase the available credit 300% with extended terms to handle the expansion. The company went on to produce over $7.5M in sales and generate approximately $3.5M profit.back to top of page

Overall, Remergenz helped the company improve its revenues over 5x, return to profitability, and enjoy favorable terms with its vendors. These financial results have provided the company with sufficient cash reserves to pay off the $4M debt, and the ROI (Return on Investment) for retaining Remergenz in this effort was in excess of a 10x target set by Remergenz at the onset of the effort.

Disclaimer: Not all companies will achieve this level of turnaround and in this short period of time.