Despite declining market and outsourcing of direct labor, the previous management had not scaled back indirect overhead; in fact, they had added a corporate layer, increasing the overall cost structure. Transaction Printer Group (TPG), combined with corporate overhead, generated an operating loss of $10.8 million in 2000. Turf protection and a general state of denial from management left no other option than individual assessments of each indirect employee.

Within three months of assuming position as General Manager of TPG and CFO of the Group, numerous corporate functions were merged with TPG and a three-phase downsizing plan was devised over a 12-month period: a major downsizing in July 2001, a minor one in January 2002 and a second major downsizing in July 2002.

Actions cut annual fixed costs by more than $10 million and 42% of the indirect workforce was terminated. The operating profit for TPG and corporate combined improved markedly: 2000, loss of $10.8 million; 2001, loss of $4.9 million; and a 2002 profit of $1.9 million.

The effort put forward with individual assessments of every employee paid off. Terminated senior staff and managers were viewed as deadwood by peers and lower-level employees; lower-level terminations were seen as an improvement in efficiency. Consequently, morale increased. With appropriate containment and Public Relations, no customers were lost; in fact, several customers applauded the action. TPG maintained its market share despite negative press circulated by aggressive competitors. Most surprisingly, however, terminated managers accepted the decision and were appreciative of the compassion with which the act had been conducted.

Axiohm Transaction Solutions Incorporated (ATSI) consistently failed to meet bank covenants. Upon assumption of CFO position, ATSI obtained an injection of capital and renegotiated bank covenants. The major shareholder insisted that ATSI must, without fail, make the covenants. If ATSI could not make covenants, control would revert to lenders and not the shareholders.

Business units other than TPG (personal division) were failing to meet commitments. Combined shortfall was significant and jeopardized covenant compliance. TPG unit was called upon on numerous occasions to make up the shortfall.

Implemented additional cost saving measures and achieved additional sales through deep discounting. While it occasionally took drastic action, TPG achieved extra EBITDA, offsetting shortfalls of other units and allowing the group to meet bank covenants. In 2001, TPG’s planned EBITDA was $4.3 million and actual EBITDA was $5.6 million. In 2002, plan was $5.1 million and actual was $6.4 million.

Business Unit was losing $350,000 a month. Orders were in-house but production was on a four-day workweek. Failing to fulfill the orders in timely fashion, customers switched to the competition. The culture of the business unit illustrated apathy toward these issues, and managers were reluctant to roll up their sleeves to resolve the problem.

Investigated bottlenecks, reassigned responsibilities and held employees personally responsible, revised the system of scheduling orders and implemented a system of daily meetings to eliminate finger pointing and turf wars. As a result, the company doubled output and achieved breakeven in less than two months.

When tasked to sell the French division, it became clear the existing General Manager (Gerant) was colluding with a buyer to ensure his position as Gerant after divestiture. The Gerant was manipulating poor results and not complying with corporate direction. France is a particularly difficult country in which to conduct business due to laws holding the Gerant personally liable.

Appointed as co-Gerant, changed the bylaws of the company requiring approval of both co-Gerants, effectively stripping power from the existing renegade Gerant. Stripped “fat” away from financial forecasts. Eliminated unsupportable charges in the monthly results. Coordinated division sale with the business broker.

These actions eliminated manipulation of the division’s results. Sales stabilized, and the French division sold for 2 million Euros more than originally anticipated.

One division was losing money and was constantly producing disappointing results. The General Manager protected it despite poor performance.

Conducted a review of the business, prospects, competition, strengths, weaknesses, threats and opportunities. Reviewed prior jobs/bids completed and identified what went wrong and what went right.

Produced a report for the Group President and advised that this business was not a strategic fit and would take significant investment in staff, design and culture to turn it around. It made better sense to cut the loss and exit the business.

The division rolled out the last orders and gracefully exited the business.

Startup business was seeking additional investment from “angel investors” but had no idea how to value the business. Because startup businesses are valued on perception, concept alone will not attract investors. It needs a “story” with successes to date, realistic projections for the future and a view of the competitive landscape.

Completed an analysis of the competitive landscape and developed a financial model allowing key assumptions to be changed “on the fly,” with all revenue and costs automatically calculated. Presented a two-scenario forecast over five years, low and expected. (There was no need to complete a high as the expected result puts the valuation in multimillions.) Provided a valuation range at current startup stage, and advised on a strategy of funds sufficient to prove the business model.

Shared this information with one potential investor, who agreed to provide all funding that is required at this stage. Once the business model is proved, the valuation of the company will increase exponentially.

TPG division was comprised of two locations and generated approximately $80 million in revenue. Prior to tenure as GM, the division had invested more than $3 million in a new printer in one year with $1 million paid to an external consulting group. Review of the product features, compared with the competition, resulted in canceling the product’s development. Furthermore, the division had been operating in “harvest” mode for several years and the competition had surpassed them in terms of features, functions and cost. Downsizing was already underway, and bank covenants were being met, but the division had no strategic direction.

CEO and an external consultant (appointed by the board of directors) advised closure of the company. Realizing that sales are often built on confidence, if word gets out to the market that the company is declining, sales will dry up quickly, beyond management’s control.

Orchestrated and held an offsite meeting with the aim of fostering a team environment and tapping staff for ideas. Objectives were: a) to show an image of progression to the external market while allowing conversion of $10 million of inventory to finished product and receivables; and b) devise a strategy that could demonstrate that the company was a “going concern.” These had to be achieved with minimal investment.

Two mainstream ideas surfaced from these meetings, and both won approval from the Board of Directors: a) team up with a traditional competitor and combine development, volumes and production costs, thereby dramatically cutting overall costs; and b) develop a suite of software products that allow a retailer (primarily a grocery store) to customize receipts and print coupons on the receipt. These coupons could be managed by the local store management, allowing the local store to promote perishable items or merely run a specific promotion. This concept leveraged technology that already existed in the company. The beauty of this strategy was that customization of the (grocery) receipts did not require modification of point-of-sale software application. Many strategic meetings followed this initial brainstorming session, and the two prevailing ideas were pursued to restore the division’s competitiveness in the market.

Startup company with a very marketable idea was encountering resistance from potential clients. Business owner was frustrated with situation and lack of sales, although he fundamentally knew it was a good idea. He could not understand why there was not a ready acceptance of the concept.

Extracted the various reasons potential clients were not buying his service. Documented and classified the various reasons for “no sale” into the following categories: 1) customer can perceive a value, but thinks it too expensive for their business, or 2) because this is a new concept, customer does not know if the investment will pay off.

Restructured the pricing policy from “one price fits all” to a tiered pricing structure allowing some clients to buy in at a lower level. Documented the competitive landscape and, with the data available, demonstrated the “value” to each prospect. Pricing structure allowed “grandfather clause” for existing clients. Added value to the original business concept, providing clients with access to a “real time” lead list at very little cost. Obtained testimonials from existing clients demonstrating the overall value, and revamped the sales process and to better leverage existing clients.

First sales event using this new pricing and process will occur in one month’s time, at a meeting where 100+ vendors of a major hotel in Syracuse will be approached by the hotel owner and presented the new business model. Vendors will feel obligated to purchase the service at the entry level. At a 50% acceptance rate, the business will grow more than fourfold. Owner has gone from frustrated to highly motivated.

TPG needed to investigate leveraging existing technology to evolve part of the division from mere hardware provider to solution provider in order to turn around lagging business. This would be a major perspective shift within the division.

Hand selected a team of four to complete a thorough strategic business plan that allowed limited risk while maximizing cash flow. The plan involved developing a utility program that provided retailers the capability of customizing receipts with logos and coupons, customizable at local level, as well as linking stores together and selling advertising space on receipts to major consumer groups.

Board of Directors endorsed the plan. TPG now has trial programs in process with Staples and Big Y (a regional grocery chain based in New England). Big Y recently conducted an evaluation, and the average “basket” per customer increased more than 50%, from $70 to $110.

Company’s CFO was terminated on June 30, 1999. Despite repeated warnings, presentations and reports, he and the CEO refused to believe the company would not meet the bank covenants. On June 30, the company defaulted on the bank covenants, forcing it to file for Chapter 11.

Personally took on all CFO responsibilities. Faced with a hostile bank group, uncooperative CEO, and hostile investors. Subordinated debt was trading at 90% face value in May 1999, in July it was trading at 25% face value.

Held meetings with the bank group and several meetings with potential investors. Secured Debtor in Possession Financing with an investment group. Prepared documentation for filing for Chapter 11. Negotiated with lawyers and investors for a “Prearranged Filing for Chapter 11.”

Reestablished credibility with the originally hostile bank group. After first meeting, they said, “Thank you, that is the first time we know what is going on.” The prearranged filing for Chapter 11 made “whole” all trade creditors. This was crucial to the ongoing stability of the company. The Bankruptcy court granted approval of the prearranged plan. One consultant and one investment bank have said, “If it was not for Stuart, this company would have liquidated.”

On joining Axiohm Transaction Solutions as CFO, recognized concerns about the existing borrowing base certificate and compliance with the loan agreement. On investigation, the biweekly certificate certified by the prior CFO—stating that the group had a borrowing capacity of $6.7 million—was found to be incorrect. The truth was that the group had a borrowing capacity of $200,000. The biweekly payroll was $400,000. Various parties did not want the truth disclosed, worried about being shut down or uncovering the incompetence of the prior CFO.

Held emergency meeting with the finance team and laid down rules for inclusions and exclusions of the borrowing base. Created a team environment and drew up a short-term crisis plan, along with a longer-term plan. The crisis plan called heavily on Accounts Receivable Clerks and reassignment of AP clerks to the AR function. In addition, increased production and accelerated shipments (the company could borrow 80% of receivables and only 35% on inventory), and moved inventory into the US from Mexico and France, thereby making it eligible for inclusion in the Asset Based Loan. The longer-term plan called for improvements in management of working capital. Accounts Receivable were reviewed at a senior level, collection targets were set and realistic rolling forecasts completed by the clerks. Furthermore, all divisions were required to get approval of weekly cash disbursements.

The crisis plan increased the borrowing base from $200,000 to more than $1 million within one week, providing breathing room. The longer-term plan brought the borrowing base to $5 million in two months. Procedures continued throughout tenure as CFO, and the overall borrowing base maintained consistently at levels ranging from $2.5 million to $7 million depending on the business cycle, interest payments and the debt repayment schedule.

The group was a combination of a recent merger of two companies, and had nine operating divisions. Cognitive Solutions was targeted for closure in an effort to consolidate operations and reduce overall company costs.

Corporate decided to close the Paso Robles factory and integrate operations in sister locations. However, the CEO had recently given Paso Robles employees assurances that there were no plans to close the factory.

As newly appointed General Manager, planned the integration of operations with a sister location, relocation of ten personnel and termination of 160. Successfully executed the plan over a period of six months, despite the animosity of employees. Manufacturing was relocated while maintaining all promised ship dates. Engineering was successfully integrated with another sister location.