The global shutdowns that occurred as a result of the COVID pandemic wreaked havoc on many businesses around the world. But for a multinational global logistics company, the situation was particularly challenging.
Revenue growth stalled, as customers rethought their logistics needs. Conflict among family shareholders erupted. The resulting cash flow disruption created multiple governance challenges in the company, which also needed to manage a smooth succession plan to the next generation of leaders.
We scoured the company’s accounting and financials in depth to fully grasp and develop perspective on their current financial situation, and to develop a strategy to optimize their P&L and Balance Sheet going forward.
For several years before the pandemic, the company was working on fleet ownership: to expand its existing fleet to meet its customers’ goods shipment demand—all on financial terms that improved the business’ capital structure. They had faced a constant tidal wave of changing market conditions, as charter rates plunged well before COVID, due to a fleet oversupply in the market. Then suddenly, following the initial COVID market crash, the financial dynamics vastly changed and the company was able to start leveraging surging demand and improving margins.
The company’s second business line was to provide support services to other global logistics businesses. Leveraging Andrew’s well-proven approach to commercial growth, and relationships with leaders in the global logistics industry, they were able to win a large contract with a major publicly traded customer that supercharged revenues and drove the company’s reputation in the industry.
The original lack of cash flow had led to a number of governance problems. As the business began generating more revenue and with more effective management, free cash flow began to increase. This created the opportunity to pay out dividends and to increase compensation. The company was able to retain key employees and family members who now had a renewed passion and dedication to the business. This allowed them to create and install a comprehensive succession plan.
