Part I: The Re-Positioning of Elvin Safety

Situation

Elvin Safety Supply, Inc.was a 73-year-old, family owned safety supplies distributor that operated successfully for four decades after its founder’s death.Then the company fell victim to the 9/11-business downturn, losing money for three straight years.The CEO was tired of battling a tough business climate and looking for a way to retire. He wanted to take the pressure off of himself and his family members, yet do what was best for his employees and the company’s legacy.

Challenges

• The product-centric company had difficulty differentiating itself in the marketplace.
• The industry was competing based on price and relationships.
• The bottom line was eroding for many reasons, with too many suppliers to purchase cost effectively.
• The family wanted to sell the company, but getting value in declining circumstances was difficult at best.

Response

Platinum Group saw potential in returning this company to profitability. Its Platinum Holdings Fund, a new type of private equity fund, invests in small, underperforming private companies with the strategy to acquire controlling interest and apply Platinum’s management expertise to turn them around. In May 2006, Platinum Group acquired Elvin Safety Supply and three Platinum partners were named to CEO, COO and CFO.

The new leadership studied the company inside and out, and then quickly decided to change the “go to market” strategy to capitalize on extensive knowledge within Elvin Safety Supply.A culture shift was engineered inside the company — from selling safety products to selling safety solutions. This shift required changing the customer contact to risk management, safety and operations executives, not just calling on purchasing agents. The repositioning included changing the company’s name to Elvin Safety to reflect its unique ability to compete based on knowledge and solutions rather than price and relationships. Internally, the company reorganized into customer teams for large accounts, to become more customer-centric, and the warehouse was streamlined by applying the Theory of Constraints for order fulfillment. Fewer supplier relationships also created greater efficiencies.

Results for Phase I

In less than a year, revenues rose by 23 percent, with significantly higher margins. Fill rates have increased by a wide percentage over previous years.Two major corporate customers have been added, and the new business pipeline filled with more prospects due to the positive reception of the solution selling approach. Phase II includes growing the consulting part of the business and developing new revenue streams. The Elvin family is both relieved and pleased because it still holds a minority share in the company.