Outside broadcasting studio builder
We worked with a company that manufactured outside broadcasting studios around the world for a wide range of productions.
Their terms of trade were fairly standard for the industry and meant the company paid for components and funded shipping and building overseas without payment from customer until the studio project they were building was complete. This caused the business to use a lot of cashflow funding.
The business also had Venture Capital funding, which had hamstrung the management. Those involved in the investment wanted to be in control, but unfortunately did not have a sufficient understanding of the business.
The breaking point came when the company effectively ran out of cash, with various bonds due to the bank for an export guarantee scheme.
How we helped:
Our first action was to apply for a Company Voluntary Administration (CVA), which allowed us time to assess the company’s situation without the fear of legal action from creditors or ‘winding up’ orders.
We then set about changing the terms of trade and we introduced nominated sub-contractors so they were paid direct by customer, without the company having to finance it all. This significantly reduced their exposure and improved the cashflow issues they were facing.
We then advised the buyout of the Venture Capital for £1 to prevent the company going into liquidation. This put them in a much stronger position and within 12 months the firm had repaid all preferential creditors and bank loans off.
The director was about to lose his business and pension scheme, but through the CVA we managed to continue business operations, which allowed us to save his pension and business, which he sold three years later for several million pounds.