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Case Study: Interim Management

Stonegate was retained to provide interim management to a $75 million consumer products company. The company had lost over $18 MM in the 2 years prior to Stonegate’s arrival. The company had, in the year prior to Stonegate, terminated the family member who had been CEO and had determined that the workout firm currently running the company was not doing a satisfactory job. Stonegate was asked to provide, on an interim basis, a President and Chief Executive Officer, a Chief Operating Officer, and a Chief Financial Officer.

The Company was in both financial and operational disarray when Stonegate was retained. The company’s lender had declared a default and was in the process of foreclosing on the company’s assets. Financial losses were staggering, cash flows were sharply negative, sales had stagnated, new product introductions had disappeared, few new customers had been secured, employee morale was low, and management talent was inadequate.

In the first 6 months, Stonegate accomplished the following:

  • Instituted $2 million of annual costs savings
  • Refinanced the company’s loans with higher loan limits and more flexible terms
  • Initiated consumer research which led to new product development
  • Recruited several new senior and middle level managers
  • Generated approximately $3 million in cash flow by disposing excess assets including an old factory
  • Established a lean initiative for the company’s domestic manufacturing activities which ultimately generated significant productivity improvements

Subsequently, over the first 15 months, Stonegate also achieved the following:

  • Reduced operating losses by over 80%
  • Introduced several innovative products which were well received by the marketplace
  • Created a new branding, product packaging, and fresh marketing of the tTrade nName
  • Restructured Company’s sourcing operations in China
  • Opened several significant new customers
  • Created meaningful sales growth through new product introductions as well as new customer relationships
  • Continued to achieve meaningful cost reductions across virtually all facets of the company’s activities

Through Stonegate’s efforts, the company was brought to the point of commercial and financial viability in less than 18 months, starting at a point of being within 60 days of liquidation.

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