Profit & Cash Flow Improvement:

Client Examples

Operational Turnaround and Refinance


The company was an amalgamation of seven acquisitions made by the equity sponsor between 2004 and 2012.  In 2013 the company saw consistent monthly declines in EBITDA making it unable to overcome its highly levered balance sheet.  The impacts of this highly levered balance sheet included fixed charges too great to be supported by the declining business and an increasingly concerned bank syndicate which moved the credit to their respective workout groups after the violation of covenants in the fourth quarter of 2013. 



The turnaround involved operational improvements, refinancing, and creating a culture of accountability throughout the organization. The first priority was to stabilize the company’s cash position and work with the bank group to provide enough runway for the improvements to take hold. In March of 2014, Keystone and the company negotiated the first of two waiver agreements which would ultimately expire January 15, 2015. These interim waivers provided the company with the cash stability necessary to implement operational improvements.


The operational improvements touched nearly every function of the business and involved:

  • Developing a comprehensive view of item and customer profitability leading to rationalization

  • Lowering material costs through vendor consolidation

  • Optimizing the manufacturing footprint

  • Managing manufacturing costs


The company was successfully refinanced through an asset-based loan structure (ABL), which allowed the senior debt holders to be paid back in full by the waiver expiration date. The execution of this transaction was supported by the bank’s confidence in the validity of the operational improvements achieved in 2014, as well as a projected 2015 EBITDA run-rate of $36MM: a level of performance which would double that of the previous year.

363 Sale


This 80-year old company was a leading $150 million manufacturer, marketer and distributor of salty snack foods. The Company began to have serious shortfalls due to a combination of losing high-margin customers, terminating low-margin customers, and an inability to secure national accounts.  This sales pressure was coupled with drastically increasing commodity and distribution costs.  The Company was quickly suffering significant losses and poor liquidity.  The Company determined that its debt structure was too high and the business model was no longer profitable – a sale or liquidation of the Company’s assets, via bankruptcy, were the only alternatives. 



Keystone was hired to develop a bankruptcy/DIP budget, market the Company for sale, and develop several key initiatives to improve cash flow. Once the Company filed for bankruptcy, Keystone managed the DIP budget and focused on daily operational involvement.  Keystone was simultaneously working with the bank, debtor’s attorneys, employees, customers, and suppliers to:

  • Manage daily cash flow, receipts, and disbursements 

  • Manage customer and supplier relations 

  • Reconcile and collect current and overdue accounts receivable 

  • Advise in relation to daily operation and production scheduling to optimize cash flow

  • Consolidate and transition operations to the most efficient plant

  • Assist in creation of a confidential information memorandum, data room, and prospective buyer list in order to sell the Company 

  • Assist with negotiating the Asset Purchase Agreement and the Working Capital Adjustment mechanism 



Keystone’s management of the DIP budget resulted in improved cash flow during the bankruptcy period.  An improved focus on profitable sales was instituted directly improving cash margins. Both current and overdue receivables were significantly reduced, generating substantial additional cash flow.  Ultimately, the DIP budget was attained and the outcome for the secured creditors was improved by 40% from the initial expectations. 

A strategic buyer purchased the Company via a 363 bankruptcy sale for three times its liquidation value.

Turnaround with Tight Liquidity


The Company has been a family owned and operated business since 1948. It is the largest independent electroplater serving the global automotive industry.  Closely tied to the struggling North American automotive industry, the Company’s revenues decreased by over 30% over three years.  The Company was in default of its loan covenants, and was expected to run out of cash in less than 60 days.



To address the immediate issues, the team reduced payroll costs with temporary salary and overtime reductions, stretched supplier payments, increased the term loan and got an infusion of cash from the owners equal to the amount of the increased loan. These steps got the Company through the next few months, buying time to implement the fundamental changes required to sustainably improve the business.


The turnaround plan was targeted for seven months and focused on:

  • Reducing plating reject rates across all business units

  • Increasing labor productivity and managing labor costs

  • Reducing production material costs and  expanding the reduction of fixed costs

  • Improving cost analyses and pricing

  • Stemming the decline of the top line

  • Increasing currency hedging 


The Company reached break-even within four months after beginning the implementation of the turnaround initiatives – three months ahead of the schedule in the turnaround plan.  Even more significant is how the turnaround strengthened the Company to be able to weather two external events that might have bankrupted it in the past, including a month-long Harley Davidson strike with a negative cash impact of $1 million, and the continued rise in the cost of nickel.

For their work on this project, Keystone won the Chicago/Midwest Large Company Turnaround of the Year and the International Mid-size Company Turnaround of the Year (Honorable Mention).

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