existing indirect sales channel with a direct sales organization, and incorporated the company’s cost structure so that management could better understand how performance variations impacted cash flows. They saw that by using debt, the company would still be able to make interest payments if the return on the sales investment took longer than anticipated. Additionally, the model evaluated the future capital structure based on multiple scenarios.
We also assisted the management team in communicating effectively with the board of directors as they proceeded through these negotiations and the recapitalization. We were able to guide the company through this process because management benefited from our position: an outsider, yet intimately familiar with the business prospects and the disparate needs of shareholders.
The results
Operating with full understanding of the impacts of recapitalization through use of the operating model, the company cashed out the majority investor and brought in a new shareholder better suited for its growth plans. The firm used the operating model as an effective tool in attracting and negotiating terms with the new investor and affect a recapitalization.
The improved communication allowed all participants to be on the same page and provide a more united front during the transition. Without Trinity’s guidance and advice, the company may have been sold to a larger competitor, forsaking management’s opportunity to fulfill their dreams and build a great company.
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