Cerberus’s investment in one of the leading U.S.-based vehicle rental companies highlights the Firm’s successful deployment of its operational and financial resources to build long-term value and healthy, sustainable businesses.
When an affiliate of Cerberus and a co-investor acquired the company out of bankruptcy, the business had suffered from a series of management missteps, an aging vehicle fleet and a high cost structure.
Although the company had the second-largest market share at the United States’ 50 largest airports and balanced revenue streams, it urgently needed to reduce its cost structure and invest heavily in vehicles, facilities, reservation systems and marketing.
After making the investment, Cerberus renamed the company and acted quickly to reduce costs, integrate its operations, and improve the competitiveness of its two consumer-facing brands and their product offerings by:
- Enhancing fleet quality and mix with younger vehicles featuring attractive fuel economies and lower operating expenses
- Improving operations and reducing costs via duel-branding of locations, airport leases and back-office and fleet operations personnel
- Expanding marketing efforts and enhancing customer service
- Integrating the company’s various IT systems
- Reducing inventory to free up $200 million of working capital
- Successfully divesting the company’s European business and refocusing the organization on improving its North American operations
Cerberus’s efforts turned a struggling company into a valuable and competitive business. In four years, Cerberus placed the rental car company on a solid growth path that increased the corporation’s revenues significantly and grew its adjusted gross earnings before interest, taxes, depreciation and amortization (EBITDA) significantly.
After completing a successful turnaround of the business, Cerberus monetized the investment and improvements through a sale to another vehicle rental corporation.