Furnishing growth in a time of turmoil
Like many businesses, Mayhew, a leading office design company, was hit hard by the 2008 global financial crisis and the years that followed. For the first time in its 40-year history, with roots going back to 1934, the third-generation, family-run business saw an abrupt and prolonged slowdown in sales of its office furniture—which caused a chain reaction of challenging events.
First, its five year banking relationship became strained—ultimately resulting in the bank calling in its $5.5 million bank line. Next, credit challenges with its key office furniture supplier escalated, ultimately leading to a legal dispute.
Despite these setbacks, the company was determined to get back on track. It underwent a major restructuring, essentially launching a new company—also called Mayhew—as a way of switching suppliers and, ultimately, reducing costs. It also reached out to a financing company, signed a term sheet and spent $25,000 in legal fees to replace its $5.5 million bank line, in a bid to relieve the bank of its arrangement. After a two-month process, however, the financing company began dragging its feet, and the transaction stalled.
In March 2015, Mayhew had reached what many would consider rock bottom. It was in the midst of an asset transfer and a law suit with its supplier. A financing company had taken out a security interest but was refusing to advance the funds, and the bank wanted its money back.
It was during this time that owner Marcia Mayhew decided to call Liquid Capital.
“Through word of mouth, I got Liquid Capital’s number. We met, they toured our business operations, and they got to know our team. It seemed to be a good fit and, most important, they understood the need to move quickly.” – Marcia Mayhew, CEO & President, Mayhew
Recognizing that time was of the essence, Liquid Capital immediately put together a competitive term sheet—a $5.5 million asset-based lending facility that would allow Mayhew to take the bank out of the picture while simultaneously providing the working capital needed to continue operations.
Once the facility was approved by Mayhew, Liquid Capital set to work conducting the due diligence necessary to put it in place. An army of lawyers later—including those working on behalf of the new Mayhew company, the old Mayhew company, the original underlying shareholder, Liquid Capital and the bank—the complex deal was closed in under 4 weeks in June 2015.
The arrangement was different than traditional factoring contracts in that it was all non-notification—essentially, to the outside world, it looked just like regular financing. This was critical given the sensitive nature of Mayhew’s restructuring. The company wanted to preserve as many of its client relationships as possible, and to successfully move them over to its new suppliers, the company needed to appear strong.
“Liquid Capital was nimble and able to accommodate our needs during a time of change, transition, start-up and growth.” – Marcia Mayhew
Onward and upward
Over the next two years, Liquid Capital collaborated with Mayhew, giving the company the runway it needed to complete its restructuring. In that time, Liquid Capital provided over 50 fundings—and approximately $40 million in revolving credit—which allowed Mayhew to close less profitable locations, sell some of its assets and preserve many of its previous client relationships.
Liquid Capital also helped Mayhew establish new supplier relationships after the restructuring by providing around 40 supplier comfort letters. These letters essentially guaranteed that payment would be received before the furniture left the suppliers’ warehouses—giving Mayhew’s suppliers much-needed peace of mind.
With Liquid Capital’s help, Mayhew is now happy to say that it survived the most tumultuous era in its history and is enjoying established sales. While this is good news, it’s also bittersweet as the company recently acquired financing from a strategic investor and is parting ways with Liquid Capital.
“We’re now enjoying such positive performance that it’s time for us to reduce our financing cost, with the goal of moving to conventional financing within the next six to eight months.” – Marcia Mayhew
While their relationship is coming to an end, Mayhew will not hesitate to recommend Liquid Capital to anyone in search of financing assistance.
“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin,” Mayhew says. “For anyone looking for financing, I recommend looking for a firm that offers flexibility and really understands the direction you want to go in. You don’t want them to handcuff you from doing your business.”
“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin.” – Marcia Mayhew