Case History: Business Analysis, Turnaround & Valuation

Trucking & Logistics: Small-Fleet Trucking Company

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FIRST ENGAGEMENT

Small businesses can turn around and regain optimal performance with a comprehensive business analysis and 13-week initiatives that set a charted course of action. Success from the strategy can ultimately lead to potential acquisition opportunities.

Situation

Situated in northwest Georgia is a well-established trucking company with a 15-year history of long and short-haul transportation of bulk materials including hazardous and non-hazardous liquid products, animal feed and livestock. Beginning at the end of 2015, over several months the company suffered a steady stream of setbacks that included declines in business from the destruction of a core customer’s facilities, untimely absorption of debt from the acquisition of a distressed company owned by a family member, family health issues, employee behavior issues leading to a compromised reputation, and overall increases in non-revenue generating costs. As the business continued to absorb losses, liens were taken on fixed assets, and to try to help capitalize the company, financing from a primary lender was executed which quickly evolved into an over-advancement the current assets could not support.

Objective

Fortis Business Advisors was referred into the trucking company by their financial institution. The primary objective was to stabilize the operation employing comprehensive turnaround initiatives, including 13-week cash flow statements, comparative operating statements, break-even analysis, and cost & profit distribution analysis. While gaining a better understanding of the financial condition of the business was underway, Fortis and the financial institution closely monitored cash flow to ensure the overall debt position had peaked and was improving, a new CPA firm was brought in to perfect the financials, and a triaged payment structure was implemented for secured creditors. This helped free-up the owner to focus on sales and service, employ exceptional drivers and a dispatcher to balance logistics, designate staff to manage invoicing and payables, sell non-revenue generating assets off of the yard, develop a high-margin brokerage business, and double-shift trucks for maximum revenue per mile.

Results         

Top-line performance improved by an average of 45.3%

The business stabilized, allowing the financial institution to designate factored receivables and develop a manageable term-loan payment structure for the outstanding over-advance

Debt service and payables steadily became more organized and scheduled with unanticipated A/P surprises eliminated

Actual cash flow was monitored against projections from 2-sets of developed 13-week initiatives

 

Fortis’ marketing team developed a comprehensive Investment Teaser Piece for prospective new investors and/or buyers

 

SECOND ENGAGEMENT

After a successful turnaround and operation stabilization, businesses are better positioned and more attractive for outside investment when an accurate valuation model is presented.

Situation

A well-established trucking company re-engaged Fortis Business Advisors to assist in a comprehensive analysis of the current financial, operational and managerial status of the company to develop an accurate valuation and pricing strategy. A potential buyer had come forward with an offer to purchase equity in the business with the request that an independent party analyze and asses the business to ensure arrival at an equitable price. During the initial engagement, Fortis had been referred to the company by their financial institution with the primary objective of getting a window into the organization and stabilizing the operation by employing comprehensive turnaround initiatives, including 13-week cash flow assessments, comparative operating statements, break-even analysis, and cost & profit distribution analysis. Once the business was stabilized, top-line performance improved by an average of 45.3%, and the lender was able to develop a manageable term-loan payment structure to get debt service organized. The company would ultimately be positioned for a merger or acquisition.

Objective

Fortis Business Advisors reviewed results from the initial engagement to establish a basis for the performance since the prior engagement. Fortis then proceeded to analyze 4-years and a trailing 12-months of financials to outline the current condition of the company and develop the strategy to not only establish a current valuation but also develop engineered profit projections to determine trend impact on a future valuation. Not only were the results of the analysis designed to give better insight to potential buyers, but also allow for the owner to recognize challenges the business was facing in order to take corrective action to make the business more valuable through future growth.

Results         

The valuation model was developed to highlight results from a multiple of EBITDA

 

A comprehensive Ratio review was performed to highlight trends, performance, and strengths of the business over historical periods

Other deep dives of the analysis included, but were not limited to: Solvency & Capitalization, Working Capital Requirements, Break Even Requirements, Comparative Operating Efficiency, Profit Support, and Controlled vs. Uncontrolled Cost Breakdown

Engineered Projections were reflected in the EBITDA multiples, and additional projection models included, but were not limited to, Balance Sheet projections, Break Even projections, Working Capital Requirements, and Cost & Profit Distribution