A full-service marketing company came to Summit as a failed roll-up on the brink of bankruptcy, looking to Summit to acquire its debt.
Subject: A full-service marketing company headquartered in Chicago and specializing in direct mail production and message tracking as well as database analysis and targeting. It utilizes industry-leading data intelligence, technology and an intense client focus to produce dynamic, results-driven communications that drive response and ROI.
Circumstance: This marketing company came to Summit as a failed roll-up on the brink of bankruptcy whose sponsor, a large private equity firm, had essentially abandoned it by turning the board over to a national restructuring firm. Summit was approached about acquiring the debt. Over the preceding seven years, the equity sponsor had acquired twelve autonomous direct marketing providers and merged them into eight divisions within the client company with little centralized direction. As a result of the poor performance of the acquired purchases, the company was severely over-leveraged and unable to meet its current obligations.
Solution: Summit acted quickly and was able to purchase approximately 55% of the senior debt (while another large investment group purchased the remaining 45%). Due to the nature of several of the subject’s customer contracts, bankruptcy was not an option if the company was going to survive. Therefore, in concert with the other investment group the assets were acquired via an Article 9 sale into a new entity with some of company management being retained. The new entity was properly capitalized to help it weather the transition and pay critical vendors who in many cases were significantly in arrears. Summit worked with the company to immediately consolidate two divisions and create synergies among the remaining six. Through the restructuring the company experienced no loss of its customer base including retaining all government contracts.
Outcome: Summit held this position for 10 years as we worked with the company to strengthen its balance sheet, improve gross profit margins to north of 35% and triple EBITDA. We weathered one of the worst financial crises in U.S. history, bought out the other financial owners, recapitalized the company with a traditional ABL facility and eventually sold the company to a traditional financial buyer.