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 Preferred is a unique case of a double-turnaround for Watermill, which purchased the company in 1996 and again in 2002. Preferred specializes in producing complex-process, high-performance rubber compounds in small to medium size batches for a variety of industrial applications. In 1996, Watermill saw an opportunity to exploit the significant attributes of the company by embarking on a strategy that continued to focus on the high quality product and service nature of the business, while expanding the company's product offering and market applications, specifically through the addition of a color compounding line. In addition, Watermill conducted a complete restructuring of the sales and marketing department. In October 1999, Watermill sold Preferred to a financial buyer and returned a strong compounded annual IRR.
 In 2002, Watermill again had the opportunity to purchase Preferred at a significant discount to its original sale, as the company had declined under new management and a lack of strategic direction and was now in default of its debt service requirements. Concurrent with Watermill's acquisition, Preferred received a new capital structure appropriate to its sales volume. Watermill used the Strategic Dashboard framework to evaluate Preferred's competitive position in light of a maturing industry. Potential strategic issues for Preferred included lack of differentiation in an industry driven by increasingly commodity pricing and a "Sybil Syndrome" - a conflict of a capacity and a product/service driving force.
Watermill once again repositioned Preferred with an emphasis on value-added services rather than high-volume commodity products, and redefined the company's value equation incorporating unrelenting attention to customer satisfaction. In keeping with Preferred's new customer-focused driving force, the company started measuring profitability by customer (rather than by pound), an approach previously unheard of in the industry. This move proved essential in guiding crucial sales, marketing and service decisions.
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