Case History: Business Planning & Debt Restructuring

A comprehensive Business Analysis will lead to an investment attractive Business Plan showing immediate improvement to cash flow from refinanced debt in a new capital structure.

Situation

Founded in 1997 as an Atlanta based and family-owned business, Construction Company began as a cleaning company specializing in janitorial cleaning and hard floor maintenance. Today, Construction Company is an industry leader and preferred vendor to insurance companies and offers a complete suite of services including mitigation, fire, water and storm damage restoration, contents cleaning, general construction services, and remediation. In 2014, the parent company made the strategic decision to divide itself to service the geographic regions of Atlanta more effectively, and a key team member purchased the construction division and expanded service renderings to include mitigation services in North Atlanta. Although the company grew to approximately $2.5MM top-line revenue, the transition did not come without challenges – the sister company mishandled a relationship with a major insurance company resulting in $3MM in lost business, and an unexpected model adjustment had to be made when procedure changed on how insurance companies paid claims. As Construction Company was adjusting its model to absorb the challenges, cash flow tightened and a primary line of credit was drawn-down ultimately leading to issues with revolving the line.

Objective

Fortis Business Advisors was referred to Construction Company by its primary financial institution with the goal of a financial restructuring to stabilize the business. After a comprehensive business analysis, a series of reporting challenges were identified and key performance indicators measured that highlighted adjustments that needed to be made prior to the development of a business plan that would be attractive to a new lender. Once the plan was developed, Fortis leveraged its relationships with SBA lenders to identify a new lender arrangement and capital structure.

Results

Key liabilities in the Capital Structure, including the line of credit from the original lender, were consolidated into an SBA 7(a) loan.

A comprehensive Business Plan was developed to attract new SBA lenders.

 

The Business Plan included a comprehensive narrative, Balance Sheet projections, P&L projections, Break-Even projections, and comparative historical financials to source projections.

An Amortization Schedule was developed that consolidated the debt schedule and showed significant improvement to cash flow from the financial restructuring.

 

Comprehensive historical and projected Working Capital and Financial Ratio reporting was developed to show the effective use of funds.

ATLANTA

10945 State Bridge Road

Suite 401-213
Alpharetta, GA 30022

Phone: 770.744.0753

Email: Info@FortisBA.com

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