Tuesday, May 10, 2011

Wisconsin Food Gift Co. Engaged UW Nicholas Center for Financial Advice (UW School of Business Nicholas Center for Corporate Finance)

Wisconsin Food Gift Company was experiencing financial distress due to the economic downturn, a poorly timed expansion combined with declining sales, high fixed costs and leverage. However, the company has attractive gross margins and significant production capacity with which to rebuild its operations. Therefore, the turnaround management team decided to pursue key acquisitions in order to exploit the capacity of its main facility and restore profitability.

Wisconsin Food Gift Company engaged a Nicholas Center team to identify these key acquisition targets in the cheese, chocolate, non-chocolate confectionery, nuts, and spices industries. After touring the facility and, of course, trying samples of different cheese and chocolate products, the team set out to understand the main drivers that put the company in financial distress and what needed to be done in order to improve the state of the company. Based upon this information and in-depth market analysis, the team determined a set of criteria and put together a list of ideal target acquisitions.

While the team worked with Wisconsin Food Gift Company, the financial condition changed significantly, and they filed for Chapter 7 bankruptcy and have started the liquidation process. The team’s work will be passed along to the main buyer of the company. The learning experience for the project was immense, as the team got to see what happens first hand with a company that’s in financial distress. From understanding key relationships with suppliers, customers, creditors, and government to different strategies companies can choose, to the bankruptcy and liquidation processes. Being able to observe a company in good times is a learning experience, however, working with a company in financial distress and understanding what went wrong and attempting to fix it was an invaluable experience.

Click here for more information on the Nicholas Center at the University of Wisconsin School of Business.

Blogger's Note: Thanks to the team that worked on this project. We hope the information you provided will help land a new user in the building vacated by the Wisconsin Cheeseman.

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