Case Study - Project T-rex

Background

• Earthmoving equipment repair company
• Annual turnover of $6 million
• Loss of $300K FY07 (profit of $800K FY06)

Key Issues

• Succession plan - sale of business required
• Senior management change did not work
• Reduction in morale
• Business is undeperforming but significant profit/cash generation opportunities
• Considerable thought required on finance structure for the purchaser

4 Phases

• Financial and operational due diligence
• Determine appropriate finance facilities
• Develop turnaround strategy for purchaser
• Implement & monitor turnaround strategy

Outcome

• Debtor book leveraged as part of purchase consideration
• Debtor finance required as considerable working capital growth forecast as part of successful turnaround strategy - Debtor finance is an important tool in any turnaround
• Transaction settled and a similar structure will be used for further acquisitions by this client

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