Market Research Company Pre Pack Administration
This client was a market research company that is based in London and has overseas subsidiaries. With two directors and 12 full time employees the business soon found itself undercapitalised due to overextension of finances, leading to underperforming and little to no visibility of turnover. This led to discord at board level resulting in a breakdown of communications and lack of cash control.
There are many indicators or ‘symptoms’ that a financially troubled business can show. In this case, there was the demotivated workforce who undoubtedly could feel something was wrong, as well as late payments to suppliers and HMRC. There was also a breach of Banking Facilities and court action being instigated by creditors. Among the causes for these problems, the lack of an overall business plan or strategy can be blamed, as well as a lack of control over the activities of subsidiaries.
Administration With Pre Pack
- Up to date financial information commissioned at IP request
- Insolvency of Company established
- Business and Assets valued to indicate how best to extract best value
- Projections prepared to enable consideration to trading on perhaps in a CVA
- No basis for trading on as continuing losses forecast
- No facilities or cash available to fund a trade on whilst purchaser sought
- No contracts in palace guaranteeing future workflow
- Real value in key personnel therefore important to retain
- No real market share – turnover under £2M
- Competitor contacted and also potential MBO considered
- Pre negotiated sale to non connected competitor agreed
- Directors appointed IP as Administrator to effect immediate sale of business and assets
- 95% of workforce retained by purchaser
- Continuity of services engendered by Pre pack sale ensuring seamless transfer of business
- Asset values maximised as sale conducted on a willing purchaser basis
- Outcome for creditors vastly improved by Prep Pack as opposed to Liquidation that would have resulted in nothing for creditors
- Subsidiaries sold to overseas management and intercompany indebtedness repaid more or less in full.
If your business is facing similar circumstances, contact us now or apply online