A typical 'crunch response'
What we faced
A £100m turnover VC backed leisure business recently found itself in the eye of a perfect storm as macro factors conspired against its best laid plans. The UK’s smoking ban, extended licensing hours and consumer circumspection all played their part in depressed trading. The banks triggered an Independent Business Review.
What we did
David Charles assisted the management team through the IBR process. This involved assisting the preparation of a revised strategy to meet the changing economic environment. This remained a growth plan designed to maximise management’s potential returns while balancing the needs of funders. These returns were valued for different scenarios. We also valued the business - less than current enterprise value but in excess of senior debt. Agreeing the plan with management is one thing. Convincing funders that it’s the right course of action is quite another. So preparing a compelling presentation and coaching management to put it across were both crucial. The growth plan had to stand up in the face of counter-arguments arising from the IBR process.
What the business achieved
The outcome was positive. The management deal was reset with the VC writing off a portion of shareholder loan notes thus reducing total debt in business in line with the company’s valuation. This brought equity back into play, incentivising management.
Equity was efficiently allocated across business to ensure a team all pulling in one direction. Bank covenants were reset and the VC made an additional £20m facility available to help fund expansion.
For further information, contact Simon Hill on 07808 938213 or simon.hill@everymind.co.uk
