Background

A $250 million staffing services firm had lending facilities amounting to $50 million with $12 million in
over-advances. The firm was reporting yearly losses of up to $12 million.

Key Issues

• The firm had begun and was continuing an employee-leasing program that was unprofitable.
• Follow-up and collection of accounts receivable was poor.
• Workers compensation experience was negative, and management had shown an inability to obtain affordable coverage.
• Fraud was identified among the employees as well as certain members of senior management.
• Important executives were distracted by personal issues.
• The firm was in breach of financial covenants under its bank loan.

Actions

• RSI helped the firm to develop and implement a plan that included consolidating branch offices and reducing headquarters staffing.
• RSI recommended that the company upgrade its accounting procedures and assisted with the changes, resulting in improved financial data for management monitoring and decision-making.
• RSI made recommendations for changes in senior management, which the company implemented.
• RSI gave critical support for investigation and successful prosecution of employee theft.
• RSI recommended and helped the firm to institute a sale-leaseback of its headquarters building.
• RSI supported the company in raising essential new capital through the sale of equity

Outcome

• The firm was turned around in six months, resulting in $4 million in profits after reporting $12 million in annual losses.