| Organization: Midwest privately held equipment remanufacturing business. | Need: Address financial strain from interest expense and cash flow pressures. | Outcome: Increased cash flow of $3.5 million to support operations and growth. |
Understanding the situation
A prominent equipment remanufacturing business had been acquired by a private equity firm for over $250 million. The company specializes in the remanufacturing of equipment used in commercial applications, providing high-quality, cost-effective refurbishments to its customers.
Despite its strong market position, the company faced significant financial challenges, including major reductions in cash flow due to the amount of interest expense it incurs on an annual basis, making it difficult to sustain operations and invest in new growth opportunities.
Boost financial outcomes with professional tax strategies.
Exploring the challenge
CLA's tax team analyzed the company's tax accounting methods and identified enhancement strategies to address its current financial constraints and need for cash flow relief.
The strategy resulted in the company deducting an additional $11 million of expenses.
This planning reduced the company's taxable income and increased its cash flow, alleviating the financial burden imposed by the significant amount of interest expense it incurs annually.
CLA did a masterful job identifying significant tax savings for our newly acquired business. Principal, Private Equity Firm
Achieving results
By finding ways to deduct an additional $11 million of expenses, the company generated a substantial cash savings of $3.5 million.
The cash benefit was particularly valuable for the cash-constrained business, providing much-needed liquidity to support ongoing operations and future growth initiatives.
Moving forward, the company plans to continue working with CLA to explore additional financial and tax strategies to further enhance its financial stability and growth prospects.