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Getting From Here to There

Chris Schwalbach  ·  May 29, 2020  ·  3 min

Summary:

A $30 million logistics company loses access to working capital from its current banking relationships. They have no funds to hire a full-time CFO but need the help to get themselves out of the financial situation they’re in. AVL partnered with the founder to cover the five necessary finance roles and the results speak for themselves.

Results: 

AVL fixed the issue with working capital, built and managed a 2-year growth plan, and fulfilled the goal of getting the company back into a new retail banking relationship at a lower rate of capital.

Getting From Here to There

Challenge:

A privately held $30M company in the logistics industry was growing so rapidly that it tripped a covenant with the bank and their line of credit was frozen leaving them without cash to access to support their business. Moreover, the CEO had attempted to find another lending relationship, leaving him unknowingly with a proposal filled with hidden costs that would have left the company in a difficult situation. While the company was without a CFO, they did have a young, up and coming executive that was capable of take the financial reins, but didnt have the experience to work through their current complex situation. The company needed a financial solution from an experienced source, and quickly. 

AVL Solution: 

Not needing a full-time CFO, yet needing to work alongside a solution-driven partner, the CEO was introduced to AVL. The AVL team met with the CEO and immediately committed to finding a financial relationship that would work for the company. In addition to discovering the costs that were being concealed by the new lending proposal, AVL provided a detailed plan for getting the company back in a retail banking relationship within 12-18 months. They would achieve this feat by forming short-term relationships with non-banking lenders and other sources of capital. AVL immediately got to work, bringing four proposals within 10 days, all with better offers to the company than the CEO’s original lending solution.

While the financial challenge was first at hand, CEO was also thinking about infrastructure as the company continued to grow and how their complex finances would be managed moving forward. AVL agreed to mentor the current controller and young executive throughout the process, making sure he would be ready to take over the business after the company had achieved financial health and had made it through the current challenge

Over two years, AVL worked alongside the logistics company as a financial partner and consultant, fixing working capital, managing a growth plan, and fulfilling the goal of getting the company back into a retail banking relationship. After the major portion of the finances were complete, AVL stayed on and continued to mentor the young executive as they prepared him to eventually take over the finances of the company.

Results: 

AVL successfully led the process of soliciting and selecting an optimal leader for the company that provided the necessary capital for growth and allowed them to get back into a retail banking relationship. The team served as a mentor for a young executive that eventually took over managing the finances of the company, with a wide breadth of learning provided by AVL. In addition, by hiring AVL and not hiring a full-time CFO for an isolated challenge, the company achieved significant savings and a speedier financial solution.

Results Summary:

  1. AVL identified four new potential bank partners and negotiated new banking relationships and capital rates to provide working capital for the company
  2. Created and managed a 2-year growth plan
  3. Mentored young controller to eventually become the CFO