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General management turnaround of a household equipment company in Europe, the USA and Asia following an LBO

Case Study

Challenge

Operating in the competitive household equipment sector, this SME employed 180 people and had a turnover in excess of €50m with operational bases in Europe, the USA and Asia. The company’s shareholder base was an LBO investment fund. Turnover was down due to disappointing profits in Europe and termination of the distribution contract by the only Asian partner. Asia’s contribution (25% of turnover) was key to maintaining the financial balance of the LBO.  

 

The sharp fall in profits required immediate control to be taken of the company along with a renegotiation of bank debt. Atreus was commissioned to ensure the company’s long-term financial health and to find a solution for Asia following termination of the long-term contract. We were also asked to draw up an action plan to rapidly lower the break-even point and actively participate in renegotiating bank debt as part of a recovery plan. 

Success

Our interim manager’s first days as Chairman of the Board of Directors were decisive in assessing key individuals to assess the suitability and solidity of a potential new Asian partner. The sales dynamic was defined through collective discussions with the network of distributors. The result of this audit was a significant reduction in the number of senior executives without any impact on either employees or middle management. The favored Asian partner was eventually rejected. Because the network needed a fresh boost to enable further growth, emphasis was placed on sales development.

 

The next 12 months allowed our manager time to boost sales and thus get the company back on track, mainly as a result of finalizing a new banking agreement. A renewed focus on fundamentals was aimed at reviving sales in Europe and the USA and intense efforts were made to find new distributors in Asia. The LBO was kept regularly updated throughout via the supervisory board. 

Results

The first 12 months were strongly focused on renegotiating bank debt and making significant efforts to boost sales. The second 12-month period involved reconstruction and reviving turnover (+15%). The cash generated exceeded investors’ expectations and put the company’s LBO arrangement back on track.

If you would like to know what Atreus can do for you in a similar situation, get in touch.

+49 89 452249-540

Atreus is the leading interim management provider in Germany and one of the largest in its field in Europe. We solve difficult operational management and transformation problems quickly and reliably. Contact us and find out how we can help you master your situation with management expertise that is available at short notice and that is the perfect fit for you.

Atreus is a co-founder of Globalise – the market’s leading and largest provider of international interim management. Accelerating change and delivering success. Worldwide. Structured as a global group of leading interim management firms, Globalise has the reach to support you in solving your company’s most important issues around the world.

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