It’s always satisfying to be able to share news of how we’ve helped our business clients. We thought we’d give you an example of a recent case where our business recovery team has worked hard to help a business navigate this challenging time and find their ideal financial solution going forward.
Nick Brierley, one of our Directors, shares a summary of a recent company sale which helped save all existing jobs.
The business recovery process
– The client in question is a fashion e-commerce business who had been attempting to raise funds for the past two years.
– Sadly, due to a difficult period of trading preceding lockdown, then continuing into the early stages of lockdown (monthly web traffic dropped from around 10,000 visits to less than 1,000) they saw a significant reduction in turnover. Cash availability was simply insufficient to continue.
– Despite the company undertaking a financial modelling exercise that factored in the available government support and detailed income forecasts, each scenario made it clear that insolvency advice was needed. Additionally, a CCJ from a creditor brought further urgency.
– In mid-April, the business formally engaged Cowgills to provide financial guidance.
– Through a series of virtual meetings, we established that the primary value in the business at that time was their intangible assets, namely Intellectual Property Rights and the brand itself.
– We made use of a trusted independent valuation agent to rapidly position the “business” for sale, whilst at the same time protecting the company from creditors for a period of Moratorium.
– We contacted over 12,000 potentially interested parties to share this business opportunity, utilising the Cowgills website, our agent’s website and email lists.
– At the same time, we engaged with the secured lenders via video conferencing and conference calls to offer them a strategy they could be satisfied with.
Following interest from several parties, we began negotiations and received four offers. Crucially, three of these offers were for the business assets only, excluding transfer of any current staff.
– One bidder, however, made an offer not only for the business and assets, but also for transfer of the staff. In terms of the price to be paid, this offer was the second highest of the four, but it did serve to reduce creditor claims as it transferred employee liabilities.
It also proposed to maintain the jobs of all six staff, so our agents recommended this bid after agreeing a sales contract, with all interactions undertaken remotely.
– The sale was completed in May, only a short while after we were appointed as Administrators.
– A sale like this demonstrates that even at a time where we could not meet face-to-face with the management, staff or interested purchasers, we utilised our expertise in order to provide the best possible outcome for creditors, as well as preserving the jobs of existing staff.