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Large Mid-Western Nonprofit Organization
in Financial Turmoil
A well-known nonprofit organization was overextended in terms of its programs,
infrastructure, talent, and finances. Employees contemplated the lack of leadership
and vision. Accounting data of individual programs and locations were convoluted
and incomplete, collections of receivables neglected, and the real extent of
the financial deterioration unknown. The widening operating deficit alarmed the
Board and had the recently hired CEO turn to an experienced turnaround consultant
and change agent.
Norelli analyzed the financial data and revealed the actual financial
performance by program and location. Short-term cash improvement and cost
reduction plans were developed and implemented. Norelli assisted the CEO
in communicating with his Board and staff and identifying a new CFO. Norelli’s
organizational and strategic assessment served as the foundation for the
organization’s strategic planning process.
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Metropolitan Nonprofit Organization
Needing New Focus
A well-established nonprofit organization had lost focus in
its programs and services. The lack of common goals of the
Organization’s different districts and financial accountability
of program and district managers had led to a negative operating
performance. The Board of Directors had been avoiding making
the hard decisions necessary to stop the financial drain and
re-focus the Organization’s resources and efforts. The
new Executive Director asked Norelli & Company to develop
a compelling Strategic Plan to unify the organization and to
make recommendations for closing the operating deficit.
Norelli selected a diverse Strategic Planning Task Force in consultation
with the Executive Director and Board President. Working alongside the
Task Force and the Board, Norelli developed a detailed Strategic Plan document
providing all districts with a common set of strategic goals. After a thorough
analysis of the Organization’s financial records, Norelli was quickly
able to develop specific recommendations for expense reductions to balance
the Organization’s budget without effecting mission-critical programs.
The momentum created through the strategic planning process mobilized the
whole organization.
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Restructuring of Leading Manufacturer of Specialty Packaging Machinery
A well-known manufacturer and marketer of specialty packaging
machinery to the beverage and food industries was losing money.
Retained by the new CEO, Norelli conducted a technology audit, evaluated
the sales organization, and spent one month personally interviewing
key customers in the U.S. and Canada. In addition, Norelli interviewed
sales managers, engineers, manufacturing supervisors and other trade
sources. Norelli’s financial analysis revealed for the first time the
actual profitability of the company’s individual product lines and industry
segments.
Based on Norelli’s recommendations, the company divested/ spun off two marginal product lines,
restructured the national sales force (eliminating one layer), hired a new VP of Marketing, and
re-focused its R&D efforts. The business returned to profitability within
a year.
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Turnaround of an LBO
A converting division of a large integrated paper company, specializing
in niche consumer products, was performing poorly following a management
buy-out. In the role of industry expert, Norelli was part of an
investigative team retained by the senior lender. Norelli’s comprehensive assessment of
the organization and its market environment indicated that the company’s operating
talent, converting technology, product line, and competitive positioning
were adequate to succeed in the market place, but the large, non-value adding
overhead structure created through the buy-out was driving the poor results
and deteriorating morale. As a result the lender was able to exert leverage
for substantial organizational change as well as divestment of an antiquated
paper-making facility.
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Strategic Repositioning of School and Art Supplies Manufacturer
A well-regarded manufacturer was spread thinly across three end-use
segments with inconsistent profitability despite impressive sales
growth. With Norelli’s help, unprofitable customers were
addressed, manufacturing of commodity loss-leader products were out-sourced
and inventory dramatically reduced, and the internal product development
and design skills needed to expand the line of proprietary and licensed
products were upgraded. The sales force was reorganized, with more focus
on category-leading customers committed to a complete product mix including
the specialty items. One mature industry segment was de-emphasized and another
sold. Profitability and return on assets improved.
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Spin-Off and Turnaround of Emerging Businesses in a Multinational Process Technology
Company
This private specialized technology company was suffering from too
many new business initiatives, inadequate market analysis and fragmented
R&D, capital investment overruns resulting in a large
“air-ball,” unstable liquidity and fragile relationships with key process
industry customers in its core operations. The company was in Special
Assets due to multiple covenant violations when Norelli was hired. After independently
assessing the market opportunities, Norelli recommended focus on
only two while spinning them off from main operations; strengthening and restructuring
management, and forming relationship teams within sales coupled with
a new incentive plan. The Board listened, and ultimately was able to complete
a very favorable sale to an international strategic buyer.
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Turnaround of Leading Retailer Amidst Shareholder Turmoil
A large family-owned retail business was struggling amidst an industry
consolidation. An abrupt and unplanned transition to the third generation,
a dysfunctional senior management, inept family members in executive
positions, and non-working family members draining financial resources further
contributed to the company’s becoming the largest problem loan in its state
for the senior lender. The company had been under covenant defaults and put
into Special Assets when Norelli was hired on behest of the bank. Behind
the scene dissident minority shareholders were considering litigation.
Norelli’s analysis of the three most significant business units made the
Board realize for the first time that two of them were unprofitable. Norelli
was able to unify the Board to take the actions needed to preserve the company
while avoiding a destructive shareholder fight. A new business model
and corporate governance structure was implemented, backward integration
efforts were eliminated, and a new outside CEO recruited. Debt was successfully
refinanced with the existing lender paid in full. The company returned to
profitability while larger competitors failed.
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Restructure of Media Company
A fully integrated newsletter publishing company was experiencing
competitive pressure from internet-based competitors and the technological
changes affecting the printing market. Norelli assessed the company’s product line, cost structure, and staffing and made recommendations for
changes. The business returned to profitability after implementing Norelli’s
recommendations.
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Troubled Regional Manufacturing Company
This struggling undercapitalized mid-tier flexible packaging company (a private company) served
well-known customers in certain packaged food segments, but was losing money and organizationally
dysfunctional. Asked to assume a hands-on role, Norelli stabilized the short-term situation by
focusing on cash, improving lender communications, reducing overhead, negotiating new terms with
key suppliers, restructuring sales compensation and focusing the management team on specific goals.
Profitability was restored. A strategic planning process was undertaken during which fundamental
disagreements emerged regarding the steps necessary to ensure long-term sustainability. With the
ownership unwilling to sell a marginal West Coast facility and make other strategic and management
changes, Norelli resigned the engagement. The company failed within three years.
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Assessment & Recommendations for
Unsecured Creditors of Paper Manufacturer Post-Chapter 11
The Unsecured Creditors Committee engaged Norelli to assess the
company post-confirmation, determine why it was under-performing, make recommendations
to the Committee, and testify as an expert witness. Norelli uncovered
and documented the Company’s failure to comply with commitments
implied in the approved plan. The judge approved motions based on Norelli’s
recommendations and testimony, which resulted in a significantly
enhanced recovery for the unsecured creditors.
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Restructuring of a Public Franchise Business
After a period of rapid domestic and international growth, this
publicly-held franchise operation was losing money once again. Norelli
was hired by high-profile outside directors though management fiercely objected.
Tensions were also high between the company and its institutional
creditors and single largest trade supplier. Norelli conducted customer focus
groups and confidential interviews with host retailers and employees. Norelli’s strategic assessment led it to the conclusion that
management’s strategy was doomed to fail. The Board asked Norelli to become the interim CEO to
restructure management and oversee a new turnaround plan. Cash flow improved dramatically,
bankruptcy was averted, shareholders unanimously approved the infusion of new equity, and the
company returned to profitability by its fourth quarter. The company remained profitable for its
entire first Fiscal Year following Norelli’s engagement, and the banks were
paid in full. It turned out that the best days of the company were
still ahead.
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Consolidation and New Alliance in a Consumer Product Business
A young business in a growing consumer-product market was struggling with integration of operations
on both coasts. Norelli uncovered substantial management, accounting, and systems deficiencies,
and at shareholder request, became the interim CEO. Finances were restructured, talent enhanced,
and one operation was closed. The company refocused, successfully forming a new joint venture with
a key supplier on the West Coast.
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Distributor of Paper and Printing Supplies Restructures its Entire Business Concept
This second-generation family business and leading multi-state distributor
of packaging and printing supplies required a comprehensive strategic
and organizational assessment, with specific focus on upper management talent.
In a ten-month stint as interim COO, Norelli acted to ensure a swift
analysis and subsequent implementation of the proposed action steps. The
entire business was restructured from a geographic to a Strategic Business
Unit concept and significant cost synergies were realized. A new incentive
plan for the reorganized sales force was put in place resulting in a substantial
reduction of total sales compensation while providing additional rewards
for top performers. Norelli’s restructuring concept helped enhance shareholder
value and made possible the transfer of the business to the third generation.
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