Initial Customer Issue – Fitness Experience was an entity created through a merger of four smaller companies and had annual sales over $7.8 million. They sell and service fitness equipment to both commercial and residential markets. Shortly after the merger was finalized in 2014, it became apparent that operations couldn’t support the new business. The company’s revenue and net profits were not meeting forecasts. In attempt to correct this, the owners made several major decisions which ultimately proved to be detrimental. The bank which financed the company started the foreclosure process as a result. When we were introduced, the bank had already repossessed a number of company vehicles and was threatening to freeze the line of credit and company’s assets. A law firm contacted us and asked if we would work with the largest single partner to ultimately negotiate a settlement with the bank and cease foreclosure action.
Solution – Through our BizVision process, we identified that a reverse merger was necessary. We negotiated a debt distribution program that protected the non-performing partners and ultimately provided the short term financing to the foreclosing bank. In conjunction with a reverse merger, we recommended and supported a successful business processes reengineering and rebranding of the pre-merger corporation which leveraged the initial reputation of our client. We also renegotiated leases and supplier contracts to provide a business foundation to continue servicing the majority of the existing client base. We implemented Improved financial reporting, which was delivered through a restructuring of the company’s chart of accounts, to provide the management team and banks more consistent and accurate metrics. We also standardized operational procedures within the warranty, service track, and accounting systems to better support the volume and distributed coverage of the customer base.
Business Impact – We managed to amicably negotiate a full resolution of the issues with the bank and break up the post merger company which divided assets and debt fairly between all parties. All foreclosure proceedings were halted and the company was allowed to open new bank accounts and continue servicing clients without bank interference. After twelve months of post project operations, the company is debt free from all bank debt and is profitable. Since our initial engagement, the company increased profits by over 550% while increasing gross revenue by over 200% and reducing costs by more than 200%. The return on investment of our consulting fees and expenditures on all aspects of the project, after fourteen months, is 330%