Case History

Restructuring a group owned by a private equity fund

The Problem

A medium-sized industrial group in the luxury sector, with plants and offices in Italy, France and Asia. It is controlled by a private equity fund. The founder of the group, who sold the majority stake to the fund, is still active in the company. After the acquisition, it becomes necessary to perform a radical restructuring of the company – production, logistics, sales and marketing and organization – in the face of shrinking profitability.

The Solution

The management of the Fund, after seeking possible solutions from several different external consultants, calls in Contract Manager s.r.l. to assess the chances of returning the group to health. Contract Manager identifies an interim management, with a background in general management and sales and marketing, and assigns him to the project, tasked with to restructuring all functions and relaunching the group.

The strategy focuses on the following objectives:

Production

To close down the old, inefficient Italian plant and to develop the plants in Croatia and China.
To diversify the product range, including some currently non-core products.

Logistics

To set up a new logistics organization with decentralized warehouses and outsourcing some activities.

Commercial

To diversify the group’s sales and marketing strategy, reducing dependency on a single large customer, and to launch new trading initiatives via their Hong Kong branch.

Administration, Finance and Control

To restructure the group’s debt and so allow the fund to exit and speed up the return of the former owner.

Personnel

To set up and implement a job-security agreement for the majority of employees, together with a redundancy scheme.

Through their efforts, the interim General Manager and the organization as a whole managed to  completely restructure the group in 18 months. This laid the foundations for further growth, while creating the conditions for some workers to return to full-time employment.

New business opportunities, together with the early effects of significant cost reductions, have produced a virtuous circle of improvement.