Stranded Capital, Recovered Value: How a Die Casting Foundry Found Its Path Forward

OVERVIEW

  • Revenue: $10,000,000
  • General Description: Die casting foundry with value-added machining capabilities
  • Geographic Location: United States
  • Markets Served: Automotive, Defense, Heavy Truck

THE SITUATION

JACO Advisory Group served as turnaround leader for a $10 million privately held die casting company that operated as a Tier 1 supplier to a domestic OEM across several critical vehicle programs. The business was significantly impacted by COVID-19 shutdowns, followed by prolonged semiconductor shortages and broader supply chain disruptions. In several cases, OEM program launches were delayed by several years.

As a result, the company was left with significant stranded capital—including plant, equipment, and inventory, without the revenue necessary to support debt service. The company’s line of credit was fully drawn, and the owner had exhausted their personal financial resources, creating acute liquidity pressure and operational risk.

THE SOLUTION

The JACO team developed and executed a comprehensive turnaround plan focused on liquidity stabilization, operational discipline, and stakeholder alignment. The plan included enhanced customer engagement, structured vendor payment plans, and the introduction of financial rigor through implementation of a 13-week cash flow forecast, formal inventory cycle counts, and improved financial reporting.

JACO negotiated a critical support agreement with the company’s OEM customer, securing lump-sum payments for capital that had not been utilized due to program delays and lower-than-quoted volumes. In addition, JACO negotiated pricing adjustments that accelerated recovery of remaining amortized capital from a standard 60-month period to 6–12 months, depending on the program. These actions generated a meaningful infusion of working capital, enabling the company to support operations and execute its vendor payment plan.

As sales volumes recovered in line with the turnaround plan, the company used incremental cash flow generated from the pricing adjustments to pay down its line of credit and retire a significant portion of its high-interest debt. Through frequent, transparent progress updates, JACO demonstrated execution against turnaround milestones, building credibility with the OEM and leading to the sourcing of new business to further support the company’s recovery.

THE OUTCOME

With operations stabilized and financial performance improving, JACO prepared the company for a sale to a strategic buyer. With continued OEM support, the transaction was successfully completed, providing a favorable exit for the owner while preserving the business and saving 50 jobs.

Following the transaction, the owner remained with the newly formed ESOP-backed company, allowing both management and employees to participate in the future upside of the combined organization.

Struggling to Recover From Disruption? Let’s Build a Plan That Works

If your business is recovering from supply chain disruption or carrying stranded capital, JACO can help you stabilize and find the right path forward. Contact our team for a confidential consultation.