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Case Study 10 – Cash Flow Management

/Case Study 10 – Cash Flow Management

Company Profile

An 84 year old family-owned publishing business with $30M in sales



An innovative CEO decided to make significant capital expenditures that would allow for future rollup strategy and state of the art operations. Shortly thereafter, the industry and the country entered a major recession.

The CEO utilized maximum credit facilities in order to acquire equipment. The Company was further burdened with large defined benefit pension plan. The economic downturn impacted operating results and created cash flow issues resulting in a covenant default. The Company was moved to the Special Assets Group and Interlochen was asked to help find another lender.



Interlochen immediately implemented a weekly cash forecasting process to assess needs and control expenditures. This brought inventories down by 30% by reducing days on hand of rapidly turning items. We worked with management to implement an aggressive cost cutting program yielding nearly two million in annual savings. We developed a monthly forecast which was distributed to the bank and potential lenders and updated each month for actual results. We also froze the pension plan.



The Company met its projections, returned to profitability and posted positive cash flow. Currently in process of refinancing with another bank under more favorable terms. The rollup strategy is working and new equipment utilization is steadily rising.