A £30 million turnover food business which had achieved strong historic growth in both turnover and earnings, however, a move to new premises, significantly increasing overheads and gearing, at the time the market was changing, resulted in escalating losses and a cash crisis.
A rapid diagnostic review of the business was undertaken culminating in a management strategy workshop at which the issues facing the business were tabled, discussed and a series of co-
The Route Map and the associated financial forecasts gained the support of the company’s lenders who contributed to bridging the short term cash gap by providing a period of interest forgiveness. In addition a proportion of debt was converted to equity thereby strengthening the balance sheet allowing the audited accounts to be filed without a going concern qualification.
The quantification of the major work streams and value levers enabled a robust profit bridge to be constructed .Further the detailed operational actions contained within the route map served as a means of monitoring progress and a basis for taking swift corrective action where necessary.
The business implemented its market repositioning strategy, regaining profitable growth. The business launched 250 profitable new products, removing in excess of 300 non-
An EBIT loss of £1.5 million was converted to a profit of £315,000 in the following year. The business was on track to achieve an EBIT of £1.7 million.
The stakeholders decided to sell the business .We provided support and guidance through the sale process, a corporate finance house was not appointed. Greencore Plc acquired the business at an enterprise value of £12.7 million. The sale of the business quadrupled the enterprise value compared with the potential insolvency outcome enabling lenders to recover their converted debt and delivering a return to ordinary shareholders.
Nature of Support
Case Details: £30 million Food Processing Business