A $15 Million Financial Gain for an Already Profitable New Jersey Manufacturer

A successful New Jersey manufacturing company was generating more than $7.1 million in annual taxable business profits and incurring nearly $2.9 million in annual business income taxes. The owners had no desire to sell their company. They wanted to retain more of the company's earnings and create stronger incentives for employees to contribute to its success.

ASC Partners recognized an opportunity to substantially improve the manufacturer's cash flow without requiring higher sales, increased operating profits, or the sale of any interest in the company.

ASC Partners implemented Strategic Capital Architecture™, a unique methodology developed and continually refined since 1996. Successfully applied in more than 280 transactions, the restructuring enabled the manufacturer to recapture more than half of its annual income taxes on an ongoing basis. The owners retained full ownership and control of their company, with no dilution of their equity.

In the first year alone, the company retained $1.4 million in additional after-tax cash, net of taxes and fees.

The additional cash gave the manufacturer more money for working capital, equipment purchases, expansion, acquisitions, and other business needs.

By the end of year eight, cumulative after-tax business cash reached $53.3 million with ASC Partners, compared with $39.9 million without ASC Partners. The difference represented $13.4 million in additional after-tax business cash, approximately 34 percent more over the eight-year period.

The restructuring also generated $1.6 million in additional employee retirement benefits, on top of the company's existing 401(k) and profit-sharing programs. Employees received these benefits without contributing any of their own money, creating a stronger financial incentive to help the company succeed. Combined with the additional after-tax business cash, the total economic benefit reached $15 million over eight years.