A client in the printing business had challenges because there exists a surplus of printing capacity available in the marketplace, and it is a highly capital intensive business with tight gross margins. The company invested heavily in capital equipment and the business experienced declining sales revenue.
As a result, the owner couldn’t support the debt service on the new equipment. Over time, the bank became fatigued and wanted the owner to refinance the business through another lending institution or to come up with personal equity to improve the balance sheet.
Next Point conducted an assessment of the company’s financial position and operational performance and outlined the risks to the owner’s personal net worth. We then developed and reviewed with the owner a list of viable options to choose from to resolve the issues along with the execution and financial risks associated with each option.
The owner opted to search for outside equity to infuse new capital into the business. The plan needed time to execute so Next Point served as a liaison between the bank and the creditors in order to keep the operation running in the meantime. It was important to solicit buy-in from all of the stakeholders while rightsizing and searching for a new equity partner.
The Turning Point
Ultimately the debt was restructured with a new bank; the Company found a new partner that provided working capital, enhanced their digital printing service capabilities, and provided an immediate infusion of new customers and revenue to the business.