This is the first in a series of consulting case studies where we take an in-depth look at common pain points in preparing businesses for the future. Our first case study highlights our recent work with a client preparing for a transaction and how our services guided the business to a successful outcome.
GHJ was engaged to assist a leading financial services provider to develop and implement a new growth strategy. As we began our analysis of their financial statements, we discovered two disquieting circumstances:
- An entire business unit, responsible for a significant portion of revenues, was losing large sums of money and was impeding on the success of the business, to the point of threatening the viability of the entire enterprise.
- The management team and board of directors was disengaged from understanding the gravity of the issue and was moving forward with operations as if nothing was wrong.
We immediately altered our approach as it became clear that if nothing changed, the company would be bankrupt within six months. We quickly assembled a small group of management along with the Chairman of the Board and developed a plan to conserve cash long enough to both shut down the losing business unit and engage an agent to put the rest of the company up for sale.
We contacted investment bankers that we knew could be effective in a sale of a business where the basic business was sound, with solid customers and contracts and would market the strengths of the company, despite the losing business unit.
We assisted in structuring the investment banking engagement such that our client would save a significant amount in fees at the time a transaction closed. Coincidentally, GHJ had a longstanding compliance client in an adjacent business that had previously expressed interest in entering into this market. We then made the connection with the investment bank.
While the transaction took substantial time to close because the buyer wanted the failing business unit fully shut down before closing, our compliance client acquired our consulting client soon after. The outcome was a great one for both of our clients; both getting the results they were anticipating prior to engaging us.
When we are engaged by a client to help them improve profitability of their business and position them for growth, possibly with an eye toward a strategic event (such as a sale), we never know what we might find once we begin our work.
In this case, the business was in serious trouble, and we helped management and the board recognize the severity of the situation and take action to save the company and the ESOP
shareholders from losing their retirement vehicle.
Is your business at a turning point? Contact GHJ Growth Planning and Strategic Advisory Team to learn more about your options and how you can prepare your business for the future.