Postive Solutions for a Business Suffering During the Recession

We like to be able to offer a good news story and Beer & Young, the UK’s leading provider of equity funding for small businesess, have year on year been able to help businesses experiencing difficulties. We have highlighted one such case below. It involves an historically successful 30 year old business, an entrepreneur who was planning for retirement but was caught short by the recession and all too quickly found his business in serious trouble.

Beer & Young’s solutions have stabilised the business, kept the confidence of the key stakeholders, particularly the bank, and should allow for an orderly and profitable exit for the entrepreneur in the next 2-3 years.

BESPOKE GLASS LTD

The business in question is a designer and manufacturer of bespoke glass rooms & furniture, catering for discerning customers. Turnover has returned to nearly £9 million this year, having suffered a major drop off of new business during the second half of 2008.

When Beer & Young were introduced, the creditor position had been untenable and was sitting at £4 million including £1million to the bank and £1million of clients’ payments on account.

Suggestions of pre-packs abound - we recommended that the business be preserved with a CVA together with investment.

The CVA has been passed with full support of creditors, offering 40p in the pound. Total write off unsecured debt £700,000.

A new investor was introduced who has agreed heads of terms that will allow the company’s principal to withdraw his Bank guarantee, have his loans repaid, and retain a decent slug of equity in the company. The investor will provide the necessary working capital, take ownership of the freehold property together with its bank debt and have a controlling stake in the company.

The business itself benefits from continuity, customers have not lost out and 95 staff have retained their jobs. Goodwill and value have been preserved and should trading continue to be positive, there is no reason why the company will not return to its historical position of generating significant profits year on year.

If you know of a business that is suffering and has a need for capital and maybe some re-structuring, please talk to Beer & Young. Investors are active in the turnaround market, businesses can be preserved and given the opportunity to recover, then return to profit.