Case Histories...
Tyre Recycling Business
Project 1: Initial investment overspend (£2m – 50% clearing bank/50% equity) in set up of tyre recycling plant with unique by-product range. Clearing bank called in investigating accountant in early 2006 as business unprofitable up to that time.
Solution 1: Through negotiation business allowed to trade through as legislative climate became more favourable (i.e. now illegal to ‘landfill’ tyres.). Clearing bank arrears settled through informal negotiation.
Project 2: As business started to move back into profitability (summer 2006) premises hit by massive fire damage – leading to temporary closure of plant and subsequent insurance claim.
Solution 2: Further negotiations with clearing bank needed to ensure insurance proceeds not scooped up and collected by bank with subsequent business closure.
Outcome: Premises reopened. Price of product increased in interim due to lack of competition. Business is now trading profitably. Further investment support obtained to increase turnover and profitability from project. This project is merely a pilot of a number of other environmental projects’ owned by company’. Essential that pilot works to unlock investment potential of other sister projects.
Interior Design Business
Project: Small interior design business with cost over–runs, slow paying customers.
Solution: Implementation of tight financial systems, clear terms of business, re-banking, emphasis on business processes as opposed to creative processes, setting up of joint ventures with large service –based organisations with large numbers of local wealthy customers, who want to sell in interior design services to these customers. Bringing in of office manager.
Outcome: Business now has solid core of repeat business with regular commissions. Plans to significantly improve brand offering. Currently NED and shareholder.
Computer Games Developers
Project: £1.5 m + t/o company faced significant cash flow difficulties. 30 staff positions at risk.
Solution: Successfully concluded informal debt deferral negotiations with key creditors. Negotiated more favourable terms with client customers. Business turned around without recourse to formal insolvency procedures. Planned fund-raising campaign to finance company expansion into on-line computer game market. Planned and developed business plan and targeted potential funders.
Outcome: Company floated on AIM and raised £9 million of external funding, valuing company at £40 million. Remunerated via success fee and shares in floated company.
Wholesale/Retail Bakery
Project: £3m t/o business with bakery premises plus 20 retail outlets and 180 staff. Lending bank no longer willing to support loss-making business.
Solution: Negotiated pre-planned receivership buyout of business, thereby securing bank’s position with minimum negative PR and ensuring that all bakery jobs were retained. Further funding obtained from existing shareholders.
Outcome: As a result of shutting down the bakery and loss-making outlets closed business returned to positive EBIT.
Outdoor Sports Equipment Distributors
Project: Previously profitable (£300k pa) business ran into cash flow difficulties as a consequence of bad management and funding of expansion out of cash flow. 35 staff jobs at risk as lending bank were unwilling to extend/continue overdraft funding.
Solution: Informal negotiations with creditors to maximise cash flow. Secured agreement with current asset financier to take out bank and inject further cash flow. Creation of business plan to attract equity investment.
Outcome: Company restored to positive EBIT. All jobs secured.
Industrial Cleaning Company
Project: Fast growing specialist cleaning business with impressive client base but with poor level of financial management and significant crown debt arrears.
Solution: Five year company voluntary arrangement with 100p in pound payout implemented with 100% creditor support in summer 2008. Financial management improved and new funding partners targeted.
Outcome: Company working capital significantly strengthened, funds reinvested in sales, operations and job costing system. Doubling of turnover anticipated in 2009. Business strongly profitable.
Manned Guarding/Security Company
Project: £3.5m t/o business with poor cash flow, margins and financial controls. However, owners had significant energy and marketing flair.
Solution: Introduced new sales ledger funding and banking arrangements.
Assisted in drive to ensure business became fully accredited/licensed operator.
Developed financial department/financial controls.
Led successful purchase of a number of distressed rival businesses out of administration/liquidation to boost turnover.Together with board instituted overall national growth policy.
Outcome: Business doubled turnover in current calendar year and significantly increased profits (c £250K pa), 5 regional offices. Provider of fully licensed, quality guarding and security services with niche dog, patrol and tracking services.
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