Case Study
Sports Education Subscription Service, California
A high-growth sports subscription business generating approximately $8 million in annual revenue had reached a critical stage in its expansion. Instead of raising equity or seeking long-term financing, the company relied on MCA funding to fuel subscriber acquisition and operational scaling.
The Crisis / Starting Point
The numbers revealed the severity immediately:
- 6 MCAs active simultaneously
- $90,000 per week in withdrawals
- $396,000 per month drained in payments
- Active UCC lien threatening to freeze credit card processing
- Vendor payments delayed
- Growth initiatives stalled
- Payroll increasingly at risk
The MCA cycle had become self-reinforcing: new funds were financing old debts, which forced the company deeper into dependency.
The owner’s emotional state was marked by stress and exhaustion. Despite strong operational competency, he felt his company slipping out of control — not because the business model was flawed, but because the capital structure had become predatory.
Financial Reality Discovered
A deep financial analysis showed the truth beneath the crisis:
1.
The company had long-term revenue strength, especially around subscriber renewal cycles.
2.
Revenue appeared high, but margin timing issues made it impossible to sustain daily/weekly MCA obligations.
3.
High-cost capital was being used to fund long-term growth activities — a dangerous mismatch.
4.
Without immediate restructuring, the company faced operational collapse within weeks.
Using cash-flow reconstruction and revenue-cycle forecasting, we developed a precise understanding of:
– What the company could actually afford
– When cash flow would improve
– How to structure payments that matched future renewal cycles
This became the cornerstone of a credible restructuring narrative.
The Strategy
The core goal was clear: stabilize cash flow immediately and align repayment with projected growth.
Our plan included:
Reducing MCA payments by 80% immediately
Implementing a titrated (step-up) payment plan aligned with revenue increases
Scheduling balloon payments to coincide with major upcoming subscription renewals
Developing a realistic, lender-grade cash-flow model to justify repayment terms
Coordinating with all funders once representation was properly established renewals
Ensuring all communication moved through correct channels, ending harassment behavior
A Repayment Plan Built on Math — Not Pressure
Every payment term was derived mathematically from cash-flow timing — not from arbitrary negotiation. The result was a plan funders could logically accept, because it created maximum recoverability for them and maximum survivability for the client.
Negotiation Process
Initial funder responses were mixed. Some resisted working through representation and attempted direct client contact — a common MCA tactic. Once that ceased, and once the hardship reality was clearly outlined, cooperation improved greatly.
We did not share every component of the financial model directly with funders, but we provided repayment terms grounded in hardship, cash flow limitations, and future revenue projections — terms we knew funders historically accept under these conditions.
The turning point wasn’t a single event — it was the shift from fear-driven communication to data-driven negotiation, which reframed the narrative from “failing business” to: “viable business with a temporary liquidity crisis caused by misaligned capital.” This made all the difference.
Outcome
The restructuring achieved outstanding results:
Debt & Payment Outcomes
– Immediate 82% reduction in weekly payments
– Structured titrated plan tied to future revenue increases
– Balloon payments scheduled around August renewal surge
– All 6 MCAs fully restructured
– UCC lien releasedd
– No litigation initiated
Business Stabilization
– Normal cash flow restored
– Vendor payments secured
– Operations stabilized
– Growth resumed without fear of collapse
– Owner regained control of strategic decision-making
Client Transformation
How They're Doing Today
The transformation was dramatic:
– The company stabilized
– Cash-flow pressure eased
– Renewals and growth initiatives could proceed again
– The owner felt relief, clarity, and renewed confidence
– Long-term stability became achievable rather than theoretical
The company now operates with breathing room and predictable obligations — allowing it to focus on growth rather than crisis.