Restoring Value Through Re-Positioning to Achieve Successful Succession

How Platinum Group stepped in to lead, grow and facilitate the successful sale of a family owned business

Situation

Elvin Safety Supply, Inc. was a 73-year-old family owned distributor of safety supplies that fell victim to the 9/11 downturn. The company lost its largest customer, which had declared bankruptcy, putting the company in harm’s way very quickly. The family recognized the need to seek help, take the pressure off of the family members and wanted to do what was best for employees, company and family 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 had tried to sell the business, but getting value in declining circumstances was difficult at best.

Response

Platinum stepped in to run the company, execute a turnaround and prepare it for sale. Rather than simply reducing head count, the new leadership studied the company inside and out to create a new go-to-market strategy. It was decided to reposition the value proposition to focus on the “cost of safety,” not the price of safety supplies. This new strategy capitalized on the extensive knowledge within the company and required a shift in culture and sales strategy, calling on risk managers and CFOs responsible for reducing their workers’ compensation costs. A new sales compensation program — based on selling solutions versus products — enabled the company to generate higher gross margins.

Under Platinum’s leadership, bank relationships were restructured to provide capital for growth. The cost structure was changed to achieve break even. Problems with fill rates were alleviated through SKU rationalization and training sales people to focus on top sellers. The accuracy and use of information systems were improved through training. With these and other business process improvements, it was possible to reduce inventory, improve customer service and increase the velocity of cash through the business.

Results

The new value proposition and sales strategy made it easier to win larger corporate accounts. The uniqueness of the value proposition in the market gained notoriety and awards for Elvin Safety. It continued to improve in cash flow, revenue growth and market share. All of this led to interest from a buyer that desired Elvin Safety’s strength in "high touch" large-account management as a great strategic fit. When Elvin Safety was sold in 2010, the outcome was financially rewarding to all stakeholders.

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