Knockdown, Inc.

SITUATION

Knockdown Inc. (KDI) is a privately held $15 million office relocation, storage and workstation set-up service company. Headquartered in Dallas, it also had satellite offices in 10 cities in and around Texas. Some of its larger clients subcontracted their facilities management services to KDI.
The company’s monthly revenue dropped by nearly 50% after two of its largest clients filed for bankruptcy after September 11, 2001. In addition, corporate customers struggling with a weakened economy delayed corporate moves and physical office changes. These factors contributed to the revenue decline. Compounding the revenue decline, poor controls and procedures for billing from remote locations caused operational inefficiencies; some remote locations were three months behind in billing. Customers were unhappy as invoices were billed but backup support information took as long as three months to arrive. Many of the satellite offices were opened based on incremental sales and became unprofitable with the economic downturn. The company violated some of its loan covenants and the lender became anxious for the loan to be moved.

CRP’S APPROACH

CRP prepared a turnaround plan that included closure of unprofitable satellite offices. CRP also negotiated 90 to 120-day payment extensions from vendors and obtained landlord concessions moving one- to two-month rent payments to the end of leases. CRP centralized the billing procedures to improve invoicing processes. CRP prepared financing packages and sought factors for the line of credit. CRP recruited a new CFO to follow up and execute the plan.

RESULTS

• The turnaround plan was successfully executed by the new CFO. The company returned to profitability within two months and the new CFO was able to secure an alternate asset-based lender.