Scott, Ken and Wayne, answer this riddle.

[Mikey P]

Back in 88 when I first started with Coit, they ran a crew of about 20 men. Most were in the their 30s to 50s and had been suckin rug as a career for a good part of their lives. They completed each job like it mattered and you could tell they had pride in their work and in the numbers they produced. The company appeared to be making a profit from the CCing devision.
Now shortly there after, due to management changes and more importantly, a high tech induced change in the economy, most of these veterans moved on to greener pastures. We now had lots of rookie 18 to 25 year olds doing the work. It quickly became this huge army of comers and goes being given 7 jobs a day where if not all 7 were upsold on, the tech would be making the equivalent of minimum wage. 10 to 12 hour days, 6 days a week for less than 10 an hour?, you can imagine no one stayed around long enough to learn anything about proper cleaning. The effects of this were and are devastating to the evolution of this once fine company.
The reputation of Coit had gone down the tube. Management at all levels are constantly changing with only the owner's family making any money. (some of the national franchises are run very well and should not be confused with the family ran side of Coit)
It's been one bad mistake after another to this very day.

My understanding has been that Coit has been for sale for quite some time now.

My question to you three is this: considering the incredible debt that I'm sure they are in (millions no doubt), can this company be bought and saved?

What could you three imagine being done to turn things around.

Is it possible?

 

[Ken Snow]

Mike~ I'd like to challenge some of your assumptions.

Why do you think they are making lots of money and still millions in debt? What inside knowledge do you have or is it all supposition?

Debt by itself is not good or bad, it is all in how it is utilized and the ability of a businesses cash flow to service it. Our businesses have more than 8 million in short and long term debt, not to mention almost a million in lease obligations. What does that mean? Absolutely nothing without knowing how much cash flow we generate to service it and how much profit is left after all of our operating and debt service cost are paid.

Coit has never had much brand recognition in Michigan, but I would guess that like any business if someone purchased it at a low point (I am making an assumption that you know what your talking about here), for a great price and poured the effort and resources into turning around the problems & customer perception issues and marketed the he$$ out of it, they could make it very successful. I think we all know the cleaning industry can be very profitable, so it should be very doable.

Ken

 

[Wayne Miller]

Don't know much about Coit. From my experience with franchising, though, comprehensive contracts and franchisees with a herd mentality make franchisors a pretty resilient bunch.

Ever hear of the Captain Steamer Carpet Cleaner franchise? I know of at least two former franchises still using the marks. Although the franchise disappeared long ago the change was transparent to their customers and Captain Steamer lives on.

Maybe it's a moot point.

 

[Brian R]

I have noticed a huge amount of Coit vans lately compared to prior years. They have gone from the shiny black van to some pretty impressive vehicle wraps. Their colors and mainly green which makes me think of lawn care. I havn't been able to check out their equipment but there image has never looked better.

I don't mind the big name commercials because it is like they are advertising for me. Some one see's the ad and thinks about carpet cleaning but anyone who cares about their home won't use a big franchise. Win Win for me.

It does scare me a little how many vans I see for carpet, tile and grout, upholstery and even air ducts.

Not too much scaring because I know their is enough business to go around.

Just thought I would put my two cents in as far as what they are up to.

 

[Mikey P]

Insider knowledge is a fair assessment.


If they can find a way to cut back on expenditures they will do it.

Twice.


Their latest guffaw is firing all CSRs from all of their devision owned offices and attempting to book and make routs from their head quarters here in Nor Cal.

According to a employee up in Washington that I know it appears the highly trained staff uses a world globe to help plan the routes for him.

Half way across the state to pick up a door mat.
Then back again for one set of drapes then off to the other corner for another 3 x 5 rug.

 

[Scott]

I'd look at the financials and see just how bad it is. Like Ken stated, debt is neither intrinsically good or bad. What matters is how the debt is used.

Take GM for instance. A significant portion of their debt is tied to benefit obligations to retirees. This is bad debt on a balance sheet because it doesn't have any back-end benefit. On the other hand it's possible GM attracted some very good employees because of their generous benefits (I know several and I'm trying not to laugh out loud). It's all coming to a head now because of a comedy of errors over the years including quality control, willingness to sign long-term and expensive collective labor agreements in exchange for promises of the employees not to strike, not pulling the plug on losing brands, etc.

So to your question - I would have to see the numbers first, then see what USP they could take advantage of (could be just a brand tune-up or a complete overhaul depending on how broken the Brand Promise is), then determine if the same money I invested in the company could be used to create more wealth easier in another investment or endeavor, then I'd talk to several trusted advisers including my accountant, lawyer, and some other business advisers.

Only if it passed each of these tests would I go forward with the purchase.

You thinking of buying it Mike?

 

[Mikey P]

If I can get a PDQ, a Hagopian and a Nanner banner I could probably afford it.