Case Study:
Premium Hair and Skin Care Company
Led comprehensive turnaround of premium hair and skin products business.
A minority-owned CPG business that provides premium hair and skin care products to the multi-cultural consumer was facing multiple challenges. Launched in the founders’ garage in 2014, the company grew net sales to $20 million in 2019. Unfavorable sole supplier pricing, unmanaged cash volatility regarding promotional spend, and increasing working capital needs led to borrowing base over-advances, reduced line availability, significant delinquent trade payables, and a large balance owing to its major distributor for past promotional activity.
The Solution
Stabilized cash flows, restructured supply and distribution arrangements, positioned the company for an injection of equity capital, and provided 13-week cash flow forecasts to the company and the secured lender
Advised company to add a second manufacturing source, providing needed pricing competition re original manufacturer
Renegotiated terms with the original manufacturer, significantly improving pricing and setting up payment plan for past balance
Negotiated new distribution agreement: 1) provided for cash advances against future sales to take pressure off LOC, 2) significantly increased guaranteed minimum purchases, 3) instituted regular funding of projected promotion spend to eliminate cash flow volatility, and 4) established a payment plan for balance owing for past promotions
The Results
Stabilized production and cash flow by overhauling supply and distribution.
Negotiated sustainable payment plans to set company on strong financial path.
$8 million EBITDA improvement, from ($4.7 million) to $3.3 million and growing.
Set up company to attract two rounds of growth equity investments at valuations very substantially in excess of valuation prior to our engagement.
Senior loan substantially paid down and brought well within facility parameters.
Company thrived as the fastest growing in its segment, leading to a successful exit with a sale to Proctor & Gamble.
Services & Roles
Turnaround and Restructuring
Financial Advisor to Borrower
*Some engagements may have been performed by team prior to joining Harney Partners.
