Gibraltar Steps In To Support Home Furnishings Company’s Turnaround

Gibraltar Steps In To Support Home Furnishings Company’s Turnaround

Gibraltar Business Capital prides itself on working closely with other financial and business professionals to help their clients gain financial security and build a foundation for future growth. 

A turnaround consultant called in Gibraltar when his client’s bank proved less flexible than necessary while certain business improvements were in process. Gibraltar was able to respond with a $13 million asset-based line of credit to help the company move through the transition. 

Infrastructure Investment Timing Pinches Cash Flow 

The 11- year-old company, based in New York City designs, markets and distributes home fashions such as bedding, towels, shower curtains and pillows to several off-price and full-price big-box retail chains. 

Anticipating growth, the company invested in infrastructure to serve its growing market. However, the timing of these investments and the cash-flow-producing growth necessary to fund them proved to be problematic, and the traditional bank that had financed the improvements did not have the flexibility to adjust to the company’s needs through this transitional period.

Turnaround advisor Ken Yager, in our recent interview[link to article] with him, emphasized that companies need to “plan for scale.” And this company was doing that. However, Yager also pointed out that companies need to have the right metrics and dashboards in place to truly understand how the business is performing. “The right numbers can give you early warning of risks to your company’s health.” Not having the right numbers proved to be a challenge for this company.

Gibraltar Funds $13MM Credit Facility to Give Improvements Time to Work

However, when company leaders realized they were having cash-flow problems, they started work to improve their financial reporting, in order to understand the performance of the business better. The company also struggled to improve inventory costing controls and restructure its infrastructure-related debt. 

Brought in by the company’s turnaround consultant, Gibraltar saw these improvement processes in a positive light, as setting the stage for strong future growth. Gibraltar stepped in with asset-based financing that allowed the home fashion producer to leave its restrictive banking relationship and gain more time to complete its restructuring. Gibraltar also used accounts receivable and inventory to provide additional working capital to create a bridge to the future. 

Businesses can be very good at their primary work and yet fall into problems when it comes to managing growth. Understanding how this happens and how it can be corrected is critical in structuring appropriate financing for transitional companies. Years of working closely with other professionals such as private equity sponsors and turnaround consultants have solidified Gibraltar’s expertise in this area and sparked creative approaches to serving their mid-market clients. 

Gibraltar offers credit facility capacity between $2 million and $20 million to serve mid-market businesses and their unique needs. Check out the quality of our leadership and read case studies of some of the more than 200 companies Gibraltar has helped so far. Then set up a consultation today with our responsive sales team.

 

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