Should never have happened...
When you’re saddled with a shit balance sheet and any profit you generate is swallowed up by debt and loan note interest, no amount of bright spark ideas can get you out of a hole when your business needs to change direction. Those very ideas are limited as a consequence of a lack of financial clout and often lead to the cheapest option that rarely delivers.
This is a business with gross margins of around 50% but saddled with a woeful balance sheet, the result of repeated Private Equity investment and lack of real direction.
I once sat in a meeting with non-exec Director representing PE Investors in the funding of an MBO involving a midlands based OEM. He was totally clueless of the business and had no inkling of how important the previous owners had been to it’s success. The result? a second PE investment that subsequently added to the debt and further weakened the balance sheet. When sales stutter in such instances, the writing is on the wall.