The true measure of success is quantifiable performance improvement and a motivated team capable of sustaining the results achieved. MCR has helped transform results in a broad range of industry sectors and in highly complex and challenging circumstances. As an indication of the depth of capabilities, a selection of previous investment cases is noted below. These illustrate the bandwidth of MCR skills from addressing heavily loss making and highly geared situations through to leading the strategic repositioning and fundamental change in traditional industries. Detailed case studies and an analysis suite are available on a confidential basis.
In the case of turnaround and sustained performance improvement, high degrees of motivation, commitment and resilience are required. MCR has undertaken a number of challenges where particular resilience and intensity were required. Despite the extent of the issues, each turnaround has been successfully completed over an average of just under 3 years of commitment. In the process almost £300m has been recovered and 7,500 jobs protected.
In the case of Property Co & Retail Co, a national network of 200 petrol stations and convenience stores were operating under a brand franchise from a major US Oil company. In addition to severe management issues, the business was unable to service its debt or meet the minimum critical capex requirements. Substantial lawsuits and stakeholder disagreements amongst multiple parties added high degrees of complexity. Operationally, the business was in turmoil, suffering fuel stock shortages and losses. A creative solution was required and implemented to protect value and employment. The business was subdivided into a number of groupings and various deals completed in parallel with improving all the core operations. The process was intense and finely balanced for 18 months in all aspects from management to realising value and meeting all obligations. At the end of the project both the banks and the equity holders received full recovery of all their debt and shareholders received an unexpected return. A potential deficit of £40m was turned into a surplus of over £10m.
Engineering Co, was an almost 200 year old UK headquartered Group with 9 subsidiaries and a traditional workforce. Turnover had fallen to the same level as the company’s debts of £25m with widening losses of over £4m and an urgent cash need. A lawsuit had been filed for £9m against the company and two US acquisitions had become loss-making, one of which had some serious environmental issues. With manufactured units in excess of £150k, there had also been a number of quality issues and an international customer base was taking fright. Despite the challenges a fundamental repositioning of the business was implemented involving disposals, NPD, offshoring and other investment and improvement programmes. Profits were restored to £3.5m after 3 years and in due course a deal was secured at full recovery for the bank and a significant return for the shareholders.
MCR has also had to deal with situations where the service provision has been heavily regulated and governed and where quality could not be compromised in any respect. The best example of this was a Healthcare Co which operates in care services and education. The complexity in this case was a need to combine 3 heavily loss-making businesses to remove significant excess overhead but at the same time, accelerate the development of the high quality services. In managing social workers and teaching staff MCR dealt with an additional management complexity. Significant investment in clinical services and specialist education repositioned the business to lead the market. The combination of cost efficiencies and service development returned the company to growth and profitability.
Technology Co was a start-up business founded by MCR and spun out of an ailing parent. The innovative software concept was implemented to meet the demands of a new internet bank launch. Executed post the technology bubble, the major innovation was in the creation of a sustainable technology and outsource business model. This was achieved by combining the ongoing development of a suite of software products with the provision of mission critical back office services to the financial services sector. The business was cash generative and profitable from launch.
Retail Co had in excess of 550 shops selling greeting cards and associated products but following the rapid departure of a number of key executives, MCR was engaged to take over management control. After a poor Christmas, profits had halved and cash severely impacted. In amongst the retail challenges of declining like-for-like sales there were many obsolete stock issues. Key members of staff had left for the competition and there was a matter of weeks to finalise the critical Christmas seasonal purchases where the year’s profit was generated. With a huge management and staff commitment the Christmas season was a success delivering a prime store like for like sales increase of 5.7% as well as clearing obsolete stock. A deal was completed recovering all bank cash and a greater return than shareholders had expected.
An example of management abilities of the MCR team was with Pharma Co. The company was highly technical and operated with 50 mainly PhD scientists, developing chemical compounds for use in pharmaceutical companies’ processes. In this case, not only was the Business Plan aspirational at best, the financial position was such that the debt alone was double the sales revenue. Profits had also dropped to a level where the EBITDA multiple required to recover the money was already 25 times. The business was repositioned by streamlining core operations, and launching a new contract research division to better utilise the technical competences. The third year of the project saw a 20% increase in sales and a fourfold increase in operating profit. This facilitated a strategic sale of the business for a cash price that recovered all debt and equity and provided a return substantially in excess of stakeholders’ expectations.
MCR has undertaken a number of other challenges in logistics and traditional manufacturing & assembly. These situations have experienced shock through key customer losses. In other entrepreneurial situations that have gone wrong, MCR has had to deal with incumbent entrepreneurs who had a disproportionate amount of influential control and leverage. They had become belligerent and were in open conflict. The businesses had been oversold with disproportionate amounts of debt leverage and underperformed. The skill in managing difficult characters, reducing their influence whilst driving through significant change proved to be a major asset.
The motivational techniques required in dealing with entrepreneurs, scientists, social workers, teachers, as well as the normal manufacturing and service staff has been a challenge. For those that have been involved in turnarounds, there is always complexity in the challenge. In some of the cases noted, the challenges have been exceptional. In each case, the success has been driven by a team of likeminded individuals who have been highly focused and determined that the company realised its full potential.