Technology, Media, & Telecommunications



Stress business plan, liquidity need and working capital assumptions


  • The client, a telecom equipment manufacturer was experiencing consistent declines in its core business due to an industry wide shift to next generation products
  • To recapture spend, the company had acquired a new product portfolio they were expecting to immediately offset their core product declines
  • The company had become significantly leveraged and negotiations between participants in the capital structure had reached an impasse
  • MERU was engaged by the mezzanine debt holders to evaluate the feasibility of the management forecast, identify liquidity need, and provide strategic options for the lenders to “take the keys”


  • Conducted interviews with industry experts from both the peer and customer level to synthesize an industry view
  • Stress tested revenue expectations by reviewing backlog and go-get revenue across channels and products
  • Identified pricing and volume trends in the core and next generation products over the historical period
  • Stress tested liquidity expectations based on management assumptions across working capital accounts and expected supplier concessions
  • Refined insights on 2021 business plan with company management team including CEO, CFO and business unit leads



The Company’s product portfolio was in line with assessed near-to-medium term industry demand and with a favorable long-term outlook in next-generation products, however, MERU’s assessment indicated ~$22M of revenues could be at risk of being delayed into the next fiscal year given ongoing supply chain concerns.


Concluded ~$6M of forecasted in-year EBITDA could be at risk due to timing of pipeline orders and ability to realize cost reductions on concessions from key supplier.


Identified a cash need which could reach $17M on revenue delays and ~$6M of risks to working capital assumptions due to expected reduction in inventory levels.