Client: Environmental Recycling Company (25+ years in operation)
Annual Revenue: $15M – $30M
The Challenge: Stagnation Due to Infrastructure Limits
Despite a quarter-century of success and strong annual revenues, the client hit a critical bottleneck. Their operations were split across two properties that were no longer sufficient for their volume. To continue growing, they needed to acquire a new, larger facility.
However, their financial foundation was hindered by:
- Inefficient Debt: Existing mortgages on their $20M real estate portfolio were held at a high 9% interest rate.
- Visibility Gaps: The company lacked a dedicated CFO. The part-time CPA was 60 days behind on accounts receivable (AR) and accounts payable (AP), leaving the leadership without accurate, real-time data.
- Capital Constraints: Equity was locked in their current properties, making a down payment on a new facility difficult without straining operational liquidity.
The DNA Core Management Intervention
DNA Core Mgmt was engaged to conduct a comprehensive company assessment and provide high-level consulting to bridge the gap between their current state and their expansion goals.
1. Financial Modernization & Reporting
We immediately addressed the reporting lag by providing hands-on support for monthly reporting and cash flow statements. By establishing a short-term and long-term strategy, we moved the company from reactive bookkeeping to proactive financial planning.
2. Strategic Debt Restructuring
We negotiated with a Tier 1 bank to refinance the existing $20M property portfolio.
- Rate Optimization: Reduced the interest rate from 9% to 5%.
- Equity Extraction: Increased the mortgage from $6M to $14M, successfully liberating $8M in cash.
- Liquidity Support: Secured an increased operating line of credit to better manage the cash flow cycles of receivables and payables.
3. Operational Continuity
To ensure long-term stability, DNA Core Mgmt transitioned into a Fractional CFO role, working alongside an in-house core controller to maintain up-to-date financials and a profitable trajectory.
The Results: Unlocking Growth in Under 90 Days
The entire restructuring and refinance project was completed in less than 90 days, providing the client with the capital needed for their new property with minimal impact on their monthly overhead.
|
Metric |
Pre-Intervention |
Post-Intervention |
Impact |
|
Total Debt |
$6,000,000 |
$14,000,000 |
+$8M Cash in Hand |
|
Interest Rate |
9% |
5% |
4% Rate Reduction |
|
Monthly Payment |
$45,000 |
$58,333 |
Only $13,333 increase |
|
Financial Visibility |
60 Days Behind |
Real-time Reporting |
Informed Decision Making |
The Bottom Line: By restructuring the debt and optimizing the rate, DNA Core Mgmt enabled the client to access $8M in equity for their new business property for a net increase of only $14,000 per month in debt service.
Current Status
DNA Core Mgmt continues to serve as the company’s Fractional CFO, ensuring the business remains on a stable, profitable, and scalable path as they transition into their new operational facility.
