The challenge permalink
We worked with a family-owned business that sold smoked fish to specialty retail and food service companies. This was the largest asset of the family and their sole source of income, and the young, third-generation owners wanted to stay involved and grow the business. The 2006 economic downturn had taken its toll on the business, but the previous 12 months had seen substantial turnaround and growth potential into new markets.
However, the owners did not have the capital to continue to fund the growth. The company had a weak balance sheet and losses/reduced earnings made it impossible to raise debt. The owners were faced with the prospect of having to sell the company at near-lowest performance levels, meaning they would not achieve maximum value and not reap the benefits of pending growth.
The Virtuoso approach permalink
Our team helped with recapitalization of the company and brought in new capital to fund growth, including revenue from club stores and conventional retail. This allowed the owners to pull out a substantial amount of capital (approximately $4MM). This solution gave majority control to new investors but allowed the family to maintain substantial minority ownership to capture benefits of the upside appreciation as the business grows without risking liability for the new capital. Moreover, the new investors believed in the owners’ plan and ability to execute and wanted them to keep running the business. The investors put in $12MM, which also allowed the company to bring in a working capital revolving credit facility.
The results permalink
- Company revenue increased from approximately $48MM in 2007 to nearly $90MM in 2012
- Company was able to increase distribution and enter into private label contracts within the club store channel
Now is the Time permalink
Virtuoso Strategic Group is a boutique consulting firm formed to deliver extraordinary value to its clients. We pride ourselves on alignment with the fortunes of our clients and an unwavering commitment to their success. We welcome you to start the conversation today.