Taylor Instruments is a consumer products company specializing in scales, thermometers, and weather stations. The company markets its product under the Taylor name selling through all the major big box retailers including WalMart, Target, Home Depot, Lowes, etc. MainStream was engaged by the private equity firm that owned Taylor to develop a strategy to monetize their investment and access the options available to the owners.
At the time of acquisition the investors had great hopes for the company expanding its distribution, gaining market share, and accelerating value. Actual performance was disappointing and restricted the ability of the investor to achieve a satisfactory exit. In addition, the company had tripped a number of bank covenants forcing some level of financial restructuring.
MSM conducted a detailed assessment of the markets, products, distribution channels, and manufacturing of Taylor. From this assessment a forecast performance model was developed and various options were considered. The options included mergers, expansion of marketing activities, factory rationalization, sale, IPO and or maintain the current investment over a longer period of time. A major issue for the company was the need to restructure the debt. Working with the company’s management, the debt holders, and the equity owners MainStream reviewed the options and provided recommendations.
MainStream recommended that the company be recapitalized with Private Equity increasing their stake in the company and a new senior lender be engaged. The basis for this recommendation was the progress the company was making in increasing its footprint in the WalMart Planogram and the discovery that one of the major competitors, Sunbeam, was considering exiting the scale business. Over the next 18 months the company’s sales increased dramatically and the Private Equity achieved a sale to Homedics a strategic buyer at a price point that the Equity Investor found very favorable.