Familiarity With Organization: MCM had already successfully invested in StyleCraft and had an intimate understanding of what made the organization successful.
Partnered With Exceptional CEO: StyleCraft’s founder, who served as CEO during MCM’s first investment period, approached us about partnering to repurchase the company after he learned the organization was struggling under current ownership. While we do not generally invest in turnarounds, we ultimately saw an opportunity to partner with a talented management team we knew intimately well to buy back the business.
Addressed Key HR Need Immediately: We partnered with the founder and former CEO to buy back the business and were able to bring back most of the old management team immediately injecting excitement back into the workplace.
Rehired Sales Team: Brought back experienced sales team that had been displaced by previous ownership.
Liquidated Excess Inventory: Under prior ownership, the company built up an inordinate amount of inventory given the rapidly changing design style of the business. We liquidated the excess inventory, significantly improving the balance sheet.
Sublet Excess Facility Space: StyleCraft’s facility had recently doubled to allow the company to carry more inventory. After the strategic decision to liquidate the excess inventory, the Company no longer needed such a large facility. Management was able to renegotiate the lease with Seller based on usage further improving the company’s cashflow and allowing a more efficient allocation of resources.
Successful Turnaround: During our 5-year hold period, EBITDA grew from -$2 million to $7 million.
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