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DURABLE GOODS MANUFACTURING INDUSTRY:
Fast EBITDA Improvement |
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Client: |
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A
manufacturer in search of current year EBITDA improvements. |
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Problem: |
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In
preparation for the sale of a share of their business to a private
equity partner, the executives of the company needed to maximize the
current year earnings before interest, taxes, depreciation, and amortization
(EBITDA) to increase business value at the time of the sale. EBITDA
was not a commonly used measure in the organization, leading to questions
about what could and could not be included in measuring profitability
as EBITDA. The management team needed assistance in valuing their
improvement projects (e.g. lean initiatives and cost reduction initiatives)
as measured in EBITDA, and needed guidance and ideas on what else
could be done to improve the business's current year EBITDA. |
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Approach: |
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Utilizing Tunnell’s Operational Value Assessment Tool, Tunnell
immediately created a tool mirroring the company’s accounting
practices that translated any improvement initiative into current
and future year EBITDA upswings. We facilitated management discussion
on identifying which improvement initiatives should be pursued in
the current year, which should be terminated or postponed, and which
should be added to maximize return in the current year EBITDA. |
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Results: |
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Established
a clear understanding of which initiatives would have the greatest
EBITDA impact for the current and future years. Determined the right
budget and right set of "bang for buck" initiatives to maximize
EBITDA contributions. |
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