A high quality printing business employing 12 staff with a turnover of £2.5m that had bank debts of circa £750k made up by a combination of overdraft, an Enterprise Finance Guarantee (EFG) Loan and equipment finance with the Bank’s associated asset finance company was forced into liquidation. I worked with the directors over a period of two years to ensure the business survived and flourished in a successor company.
The directors were aware that the principal reason for failure was the cost of equipment it owned subject to leases which were surplus to capacity following the downturn in contracted work due in turn to the downturn in economic activity which had resulted in the company cash flow being significantly affected and experiencing a rapid decline in its margins.
The company could not invest in new technology and resorted to attempting to fix old machines, which often led to it missing delivery deadlines which impacted on the reputation of the company.
I was initially brought in to assist the directors in their discussions with the bank prior to liquidation. When it became clear that the Bank was insistent that the company went into liquidation I was asked to lead this process and facilitate the transfer of the business to a successor company.
The Company had a number of strengths including a dedicated and highly motivated MD with a significant level of experience in finance, a number of high quality customers who wanted to support the business, suppliers who wanted to continue to assist the business and a core of loyal and hard-working staff.
Working with the MD, using my dual roles of liquidator and turnaround consultant I created working capital for the new business through a deferred consideration sale. This agreement was reached with the consent of the creditors and other stakeholders of the predecessor company and the regulatory bodies.
We developed through an analysis of the MD’s detailed forecasts and management accounts, the strategy, structure and the plan for the new business. I provided personal and professional support and mentoring to the MD to enable him to appreciate the importance of managing customer relationships, and together we devised a sales strategy together which the MD then successfully implemented.
I also worked with the MD to draw his focus more to the management of the whole business including staff and suppliers in addition to customers and away from his preference of absorbing himself in preparation, analysis and re forecasting of management information.
This process resulted in the majority of jobs being saved and some new recruitment taking place, over 75% of the secured asset finance was repaid, the Bank received close to a 95% repayment of their debt. 65% of listed trade creditors by value have continued to trade with the company.
Since my involvement the company has had 3 clear years’ good trading results. It has invested for the first time in 4 years (in a state of the art dye sublimation digital printing machine).