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AUTOMOTIVE DISTRIBUTION INDUSTRY :
Operations and EBITDA Improvement |
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Client: |
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A
major distribution firm which had grown rapidly from $50 million to
$500 million through an aggressive acquisition program. |
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Problem: |
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Although
revenue growth was rapid, earnings growth did not keep pace. EBITDA,
as a percentage of revenue, declined from 20% to 10%. The company
needed to increase EBITDA prior to an anticipated IPO in 18-24 months.
Executives thus had to identify the key initiatives that would yield
the right balance of current year profits and long-term value. The
success of the IPO depended on identifying the right initiatives and
providing a clear message to the market. |
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Approach: |
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Using proprietary decision support tools, which account for risk and
uncertainty, Tunnell's experienced team developed the optimal set
of initiatives and timing for a successful IPO exit. Tunnell was retained
to support implementation. |
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Results: |
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Within
six months, Tunnell helped the company identify, develop and launch
the following initiatives:
Analysis of customer profitability to determine the origin of profitable
business
Standardization of the company operating model among various acquisition
firms
Expansion of product offerings beyond pure distribution into higher
margin, value-added services needed by current clients
Introduction of new processes to streamline operations and reduce
costs
Tunnell identified an increased EBITDA margin of 15% within the year,
resulting in an overall increase in business value of 20%. Additionally,
the executives developed a crisp, defendable message for its employees
and the IPO market |
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