Client Profile
The Company was a growing technology business with a strong customer base, proprietary technology and significant recurring revenue. Despite attractive underlying fundamentals, aggressive expansion, elevated operating costs and a highly leveraged capital structure created a severe liquidity crisis. The Company faced approximately $32 million of secured and unsecured debt, declining liquidity and significant near-term maturities. Several lenders had accelerated repayment demands, while suppliers and employees were increasingly concerned about the Company's financial position. A conventional refinancing was not achievable on acceptable terms. A strategic transaction was identified as the most viable solution, but the Company required sufficient liquidity and operating stability to complete the process.
Key Challenges
- Significant debt relative to current earnings and cash flow
- Near-term maturities and limited available liquidity
- Declining lender confidence and tightening creditor terms
- High fixed operating costs following a period of rapid expansion
- Customer concerns regarding business continuity
- Substantial value embedded in proprietary technology and recurring contracts
- Limited time to complete a transaction before a potential enforcement action
Our Mandate
A coordinated distressed M&A and recapitalization process was implemented rather than pursuing a standalone refinancing.
- Liquidity Stabilization
- Preparations for Sale of Business
- Competitive M&A Process
- Creditor Negotiations
- Acquisition & Recapitalization
Results
- $41 million of new capital raised
- $23 million reduction in total debt and related obligations
- $8 million annualized reduction in operating expenses
- Preservation of the Company's core technology platform and customer relationships
- Continued employment for approx. 235 employees
- Stabilization of key customer and supplier relationships
- Successful transition to strategic ownership
- Creation of a substantially stronger capital structure capable of supporting future growth
Client Outcomes
A distressed technology business with strong underlying enterprise value was transformed from a liquidity-constrained and highly leveraged company into a well-capitalized strategic platform. The combination of operational restructuring, creditor negotiations, distressed M&A and new equity capital preserved enterprise value that would likely have been substantially impaired through a conventional insolvency or liquidation process.
RCP engagements are tailored to the facts, stakeholders and objectives of each situation.
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