Case Study in Corporate Governance Work

Background

Having lost a significant customer contract representing over 50% of its revenue base, this $12M retail company based in Down east Maine was retained by the board of directors.  The business had multiple shareholders most of whom were passive investors receiving dividend income on a regular basis.

Need

Evaluate the remaining business and determine whether it should sell; continue to operate the remaining business profitably; or expand the business through acquisitions.

Process (Diagnostic)

Facilitated a series of strategic planning sessions with directors and shareholders to determine views on business direction.

Created a survey for completion by directors to rank order strategic direction, interest in acquisitions, debt tolerance and dividend distribution requirements.

Developed operating scenario forecasts for the “as is” and “acquisition” options to determine profitability and dividend distribution potential;

Organized a valuation comparison of each scenario to assess which option yielded the greatest return on capital to shareholders.    

Result

Provided the board and ownership a tool to quantify their strategic options.  This assisted the board in facilitating a stock repurchase program.  A second benefit through the survey was to achieve a consensus of the board around the company's direction and provide executive management with guidelines for operating and acquisition criteria for the future.