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The Client

A private, equity-owned commercial services company found itself in an increasingly problematic situation and the owners were seeking to bring stability to the business.

The Problem

Including its non-compliance with its Senor Credit Facility covenants, the Company had a growing list of distressing issues involving declining revenue, eroding margin, a deteriorating EBITDA, and significant management turnover.

As a result, the equity owner and Senior Lenders had serious concerns for the Company’s status quo with Senior Lenders threatening to exercise remedies available under the Credit Agreements.

Challenge Accepted

In critical need of financial management and leadership, the Challenger Advisors team was called in and assumed the Company’s interim CAO position to lead its administration and financial functions.

We immediately began identifying the primary causes for the deteriorating EBITDA and determined it was due to:

  • Excessive discounting
  • Uncontrolled advertising spending
  • Bloated administrative payrolls

Furthermore, the Company’s culture and organizational structure issues were the causes of the high management turnover rate.

The Results

Challenger Advisors streamlined or outsourced administrative processes in order to reduce overhead. In addition to improving pricing analytics, customer tracking and website SEO, we enhanced the Company’s gross margins and successfully renegotiated real estate leases–all while concurrently decreasing advertising costs.

Challenger Advisors’ hands-on approach to Turnaround Management services enabled the Company to go above and beyond its strategic goals. Our involvement led to negotiating a Forbearance Agreement with Senior Lenders and helped improve EBITDA by 133% over a 24-month period.

The Company’s enterprise value, which was originally estimated at $75 million, improved to $140 million whereby the Company was sold in a very successful offering.

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