Case Study: A Manufacturing Company
A manufacturing company reached out to New Direction Capital during its 15th year in business. Alongside its steady growth and profitability, the company had growing pains, which were impacting their day to day operations causing business challenges, risks, and opportunities.
This client understood that in order to maintain profitable growth within their highly competitive industry, specific issues needed to be addressed quickly including: which of the multiple acquisition opportunities in front of them should be pursued; what strategies would work best to manage their profitable growth; and how to make decisions regarding outgrowing their physical space.
First, New Direction Capital as virtual Chief Financial Officer met with the client to understand their long-term vision for the business, together we chose to target five specific areas: Help in analyzing business acquisition opportunities, Prioritization of growth opportunities, capital planning to handle growth, financial measurement needs, and finding a new location to assist with the client’s physical expansion.
Help in analyzing business acquisition opportunities:
- NDC cut down on the client’s time to investigate and analyze acquisition opportunities; saving client over 115 hours in the process.
- NDC previewed the value a specific acquisition would bring to the business and assessed the true value of the 2 companies the client acquired with our help: saving the client over 35% in the negotiations.
- NDC studied, researched and worked with the client on due diligence of the proposed acquisition targets, identifying the top two businesses our client should acquire.
- NDC uncovered, through due diligence collaboration with client and his team, important information which revealed additional risks; this saved the client both time and money.
Prioritization of growth opportunities
- NDC saved client time and money by working with client and his staff on prioritizing the multiple opportunities.
- NDC helped our client develop a channel strategy with special pricing for that channel.
Capital Planning to Handle Growth
NDC worked with client, staff, and accounting firm to assess their capital needs. We also were able to work with their bank to expand their line of credit to handle the growth of the business. NDC worked with the bank on our client’s behalf developing the finance package and working on the capital request needs with bank staff saving clients money on the line of credit and several hours in dealing with the bank.
Financial measurement needs
NDC developed financial targets for the business and created financial models for the combined businesses to analyze the businesses value after acquisition saving the client time, money, and enhancing the value of the business. We also developed a solution to better track existing operations and to track the success of the businesses they were acquiring.
NDC developed a few options for the new facility, analyze them, and built a financial model to assess the net benefit of moving to the new facility. We were also able to develop a solution that allowed the client to purchase the building over a 5 -year period securing the location and adding to the wealth of the business.