Financial Leadership, Culture, Business Process

Client: Global chemical company with annual revenues of several billion dollars

The Assignment:

The company did not have the sufficient size and global reach in order to survive in the chemical industry. It had a highly entrepreneurial culture but lacked the strategic vision and bandwidth. The goal was to identify the appropriate vision and strategy for the company and put it into action.

The client’s financial performance needed to be improved rapidly. The company was in danger of violating some of its bank covenants and there was a need for urgent action.

Results:

Our initial goal was to immediately improve the financial performance of the business and to subsequently position it in the right strategic direction.

We first conducted a critical analysis of the client company and benchmarked it against other companies in the industry. On evaluating the business and the client’s financials through multiple lenses, we came to a startling discovery. The client’s working capital was completely out-of-kilter and could be reduced by around $200 million. Convincing the client that this could be done was easier said than done but we persevered and succeeded. We put the processes in place to reduce the working capital immediately and within twelve months we were able to reduce it by $150 million. In the following twelve months, we took another $50 million out of working capital. The more challenging part of our mission was to establish the right culture to sustain the benefit of what we accomplished. The right business processes had to be put in place, people trained to think and behave differently. All this was possible largely due to DestinHaus’ industry expertise and business leadership/transformation experience. That gives us the credibility to go beyond normal restrictive, self-imposed constraints that some companies impose on themselves. Sometimes, such constraints are unnecessary and stifle innovation and growth; in fact, sometimes they threaten the very survival of businesses.

We then identified a “game-changing” acquisition for the chemical company, a transaction that would shake up the industry and issue a wake-up call to competition. The acquisition target was initially thought to be beyond the reach of the client company but we were able to change their mind-set and got them to realize that they could “make the improbable possible.” The acquisition was completed successfully. The combined company went through growing pains but has since emerged as one of the major players in the global chemicals arena.