MC Tool

Sean Witty and Jason Premo acquired MC Tool, a machine shop located in South Carolina in 2007 with the intent to transform it into a precision manufacturer. Witty and Premo were able to more than double revenue to $6 million in their first year of managing MC by expanding production capabilities and adopting best practices. It seemed that their plan to use cash flow from MC’s business to fund the transformation into precision manufacturing was well underway. However, the Great Recession substantially reduced the demand for the high quality tools MC made; many of the existing orders were cancelled while most new ones went to low quality-low price competitors. The two partners laid off 34 of their 57 employees, cut the salaries and workhours of those remaining, and negotiated with their creditors to delay the repayment of their $3 million debt. Teaching Note for HBS Nos. 213-013 and 219-718.