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Case Studies


From a Troubled Business to a Highly Successful LBO

A Preemptive Turnaround by CXO Advisory Group


An extremely profitable, but stagnant, manufacturer of Graphic Arts products for the Automotive OEM market, was acquired by a private equity firm, its 4th owner in 10 years. 

Based on inadequate due diligence, and incomplete information obtained from the seller, the new owners believed they had a diamond in the rough which could experience monumental growth under their ownership. Armed with this misconception, they purchased the company for the full asking price and arranged a financing package that included a significant increase in the principal payments, every 18 months.



Risk - In reality, the business was on the verge of collapse. The company was extremely profitable because it had no competition in its primary niche, which accounted for 60% of sales and 80+% of profits. This was soon to change. In its remaining business, the backlog had been inflated by contracts that were priced far below cost to obtain orders and increase the perceived value of the business. 


Manufacturing - None of the previous owners had made the needed expenditures for preventive maintenance, updated equipment or process improvement. Thus, the equipment was inefficient and produced a high percentage of reject material; while the process remained extremely labor intensive.


R&D - Although there were qualified technical personnel on staff, no formal programs existed for product development, process improvement, or even to eliminate the use of hazardous solvents in manufacturing.


Sales & Marketing - The sales team was knowledgeable, and professional; however, they were relegated to being route salesman, calling on existing customers regarding current business; rather than using their talents to help grow and diversify the business.


New Leadership- CXO Advisory Group was recruited by the private equity firm to: correct the problems noted above, rapidly grow the business so that future financial obligations could be met, and significantly increase the Company’s value.



General Motors, the customer whose business had been deliberately misquoted, was given two options, either pay market price for the product or lose the Company as a supplier. GM chose the former and the business was profitable for the duration of the program. 


An accelerated R&D program was begun to create a new generation of products, with unique performance advantages that would obsolete those which faced competitive pressures. Thanks to this effort, The Company was able to retain 100% of its core business and each of the Automotive OEMs revised their specifications to include this advanced technology. The latter virtually eliminated future competitive threats.


Aggressive market and product development programs generated significant new Automotive business, as well as dominant positions in both the Consumer Durables and Medical Disposables markets


Within 48 months: Revenue grew by 92% and EBITDA doubled


Debt was eliminated 2 years ahead of schedule.

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