About us

$350MM global, private equity owned rollup of 9 legacy big pharma sites in CDMO (Contract Development and Manufacturing Organization) model

Opportunities and Challenges:

• Losses, negative $45,000 EBITDA
• Rigid asset purchase agreements that restricted commercial opportunities, prohibited headcount reductions, and titular changes
• Underutilized sites, excess capacity, producing late lifecycle products approaching or past the pharma “patent cliff”
• Contract pricing and volume design that frontloaded obligations from former legacy owners for sustainable volumes for a very short term
• An unrealistic forecast for commercial opportunities coupled with a grossly undersized sales team
• Sizeable capex obligations due to deferred maintenance, poorly executed contracts for new business requiring AVARA to expend large sums to “buy business” from other pharma companies willing to transfer their commercial production (manufacturing and packaging) in exchange for low pricing, and large commitments to buy machinery and equipment
• Large deferred obligations, such as balloon payments, substantial seller note obligations, and other acquisition financing arrangements that severely impaired near-term and long-term cash flow
• Excessive spending on IT (opex and capex)
• Excessive spending on HQ staff
• Ineffective sales and marketing – the company was focused on brand leadership above its size and scope when what it really needed was sales
• In addition, AVARA was in covenant violation with its bank, and the relationship was strained

Solutions and Results:

• Reduce headquarters line and staff officers’ headcount
• Recruit global restructuring team
• Cease all non-critical spending
• Contact Customers/Seller Note holders
• Cease payments and begin negotiation of seller notes
• Freeze all past due payables
• Model Proforma forecast
• Cease IT projects and reduce IT spend
• Replace law and accounting firms at lower rates
• Replace overpriced IT through insourcing
• Move HQ; sublease corporate office
• Establish supply chain credit programs with vendors
• Accelerate A/R Collections
• Limited headcount reductions/consolidation/attrition
• Wage and benefit alignment
• Consolidate certain senior management positions

Of those action steps:

• HQ headcount reductions produced an annual EBITDA improvement (Salary, Bonus, and Perquisites)
• Lease termination generated a savings, boosting annual EBITDA
• Cancellation of certain corporate events and trade shows produced an annual EBITDA improvement
• Divestiture/administration of certain European sites created tens of millions of annual EBITDA improvement
• Reduction of marketing expense
• Renegotiation of supply agreements at four US sites improved EBITDA by millions annually
• Renegotiation of the maturities of seller notes and certain accounts payable
• Restructuring and insourcing of the expensive IT program
• Negotiated stretch-out of the high accounts payable related to prior IT expense with legacy IT vendors
• In-depth, on-site review of each operation to explore opportunities to reduce costs and drive production and revenue
• Freeze on all hires
• Review of all insurances and health care policies with a new Broker of
• Record to eliminate excess costs and improve coverages and increase employee participation in premiums
• Consolidation of executive roles and elimination of duplicate roles
• Reduction of millions in IT capex spend
• Reduction in IT contractor fees
• Reduction in audit and legal fees
• Streamlining and consolidation of common vendor contracts
• Drawdown sale and shipment of excess inventory to customers to reduce on- hand materials and improve cash flow and cash on-hand