A $20 million cannabis and lab testing company was five months from running out of cash when Enhance arrived. The company was crippled by a toxic relationship between management and the board - described as "fistfights" at every meeting - and a CFO who couldn't produce a credible budget or financial package.
Board distrust had brought all progress to a halt while the company attempted to sell itself to avoid insolvency. The business was factoring receivables at high rates, significantly behind on shareholder debt payments, and bleeding cash from a failed multi-million dollar satellite lab. A previous sale attempt had collapsed, and with only months of runway remaining, closing a new deal was the only path to survival. Enhance immediately took control of board meetings by creating a robust, conservative budget and credible financial reporting package, rebuilding trust and allowing management to focus on operations instead of political battles.
Within six months, Enhance closed the failed satelite lab, discovered and filed for $1 million in sales tax refunds on incorrectly taxed equipment, and successfully guided the 100-employee company through due diligence to close a strategic sale based on their proprietary software.
Enhance focused on rapid stabilization of the board relationship and cash position while preparing the company for a successful sale.
"We took back the board. They were high-fiving me and hugging me, so grateful that it went well."
- CEO/COO reflecting on first successful board meeting
The engagement saved the company from certain insolvency. By stabilizing the board dynamic and establishing financial credibility, Enhance enabled management to focus on running the business instead of fighting political battles at every board meeting.
The company successfully closed a strategic sale to a large acquirer interested in their proprietary internal software platform. The six-month engagement provided the confidence and clarity necessary for the buyer to proceed with due diligence despite the company's precarious cash position and declining cannabis industry fundamentals.
While the underlying cash challenges remained difficult due to slower-than-expected diversification into food testing, the establishment of financial integrity and board stability made the difference between a successful exit and insolvency for the 100-employee lab.