Case Study – #2 Graphic Services Company

case-study-2

Executive Summary

Strategic Restructuring:  A key factor here were “fresh eyes” looking at obvious, but legacy obstructed, corporate structure and alignment issues.  Allocating resources properly and selling off non-core businesses yielded not only more efficiency within the core business units, but raised capital as the company divested itself of those business units that added little value and were not in line with the corporate mission.

Business

Graphic Services Company

Problem

  • Falling revenues and profits
  • Diverse group of small business units through acquisitions

Discovery and Assessment

  • Substitute technology was creating pricing pressure
  • Client attrition within the non-core business units
  • Division was comprised of a number of small business units with no common or related strategies for growth.
  • Two of the business units had no relationship to the primary brand image of the corporation
  • Three of the business units had P&L objectives and strategies that were not aligned, and sometimes were a detriment, to the core business units of the parent.

Solutions

  • Identify which business units were designed to provide added value to the core business realigning their governance and P&L goals accordingly.
  • Realign business units that support the core
    • Lean principles to eliminate waste
    • Integrate support units into core business to reduce management structure
  • Divest of those that were low EBITDA producers, distracted management and drained shared resources.
    • Created stand-alone offerings for Publishing and Packaging units
    • Separated financials for units targeted for divestiture
  • Separate the technology group creating a “cost center” to support all business units proportionately without requiring a separate P&L thus properly aligning goals with core business.

Results

  • Vertical alignment of sales organization leveraged larger business unit sales force yielded reduction of cost of sales by 50%
  • Immediate EBITDA improvement of $5 million annually
  • Obtained LOI for one of the non-core business units