GROWTH & VALUE ADVISORY
Teaching an Old Dog New Tricks
Igniting growth to deliver value means taking a holistic approach to the entire business problem. Just cutting costs or launching products won’t work. Delivering the right combination of solutions to sustain growth over time creates value.
Slowing revenue at a mature company is a symptom, not a disease. Any company in business for 25 years with a strong brand in its market will experience ups and downs. Sometimes when an outside investor takes over, seeing the good through the bad takes some extra effort. When done right, the results are worth it.
A 25-years-old, industry-leading provider of sustainable, eco-friendly apparel and accessories manufactured in the USA was purchased by a private equity firm. Within 18 months of purchase, the business began to show revenue and EBITDA erosion, as well as an exodus of talent. The CEO showed little ability to turn the situation around. The new owners needed a solution.
Marea Partners initially provided a comprehensive assessment of the problems and opportunities associated with the asset. The company needed to stop the bleeding and get back on a growth trajectory quickly. The double-digit slipping would be stopped with transparent financial controls and process improvement in supply chain and manufacturing. Growth would come from a new product roadmap and a focused and amplified direct to consumer strategy. The private equity firm agreed.
The PE firm replaced the CEO with a Marea Partners team member who could work directly with the remaining leadership to correct the strategy and grow the value of the company. Taking a very personal approach, the team quickly stabilized the organization. Solutions for improvements came from all sides - employees and executives - creating an environment of trust and empowerment. The turnaround required a 20% reduction in the size of the company’s workforce, yet the morale and energy of the company improved as a culture of openness and accountability took root.
The next step - accelerating growth and increasing value - relied on that changed dynamic within the company. The plan to grow the firm’s value included repositioning of existing brands, creating new revenue streams, and optimizing the supply chain. The company launched 6 new products within 12 months, expanded distribution with a robust e-commerce channel, and crafted a 36-month long-term growth plan. The talent stopped fleeing, and new world-class managers joined the firm, including a new CEO committed to the new culture of growth and value.
Ultimately, the project led to nearly $1.6 million in reduced expenses, while simultaneously strengthening the company's focus on green manufacturing by supply chain and technology improvements. Revenue projections saw growth set to double. Restructuring the company’s outstanding financial commitments helped further increase near-term financial strength. What had been a stagnant enterprise with dwindling prospects became a vibrant, financially growing valuable company.
Within 12 months
Projected Revenue: 2X