Case Studies
Case Study – LX Wholesale Limited
LX was an electrical goods wholesaler who supplied, amongst other customers, some large 'shed' retailers who in turn had complex rebate arrangements and EDI systems in place. The incumbent FD was inexperienced in this sort of business and took his eye off the ball on these elements, which created a major funding problem – the major debtors were not paying and he did not know why. The lenders – in particular the main bankers – were becoming increasingly nervous at the funding profile.
Case Study – R and D Music Limited
R&D is a 'new technology' music-related business that was in the early stages of developing a new and innovative product for the market. The shareholders had injected personal funds to support the development to initial prototype, but further cash was needed for the final push to creating a production version. They approached us for help with funding.
Case Study – PAD Services Limited
PAD was a commercial painting and decorating company in South London, which had a well established footprint in the area and some very well established contracts with local building firms. The directors identified a potential opportunity for expansion – providing services directly to the local authority who had substantial work available, but only for contractors on their panel. PAD wanted to get on this panel and pitch potentially lucrative work…but needed to understand what they had to do and what the cash implications might be.
Case Study – Big Steel Limited
Big Steel was a metal forming business - thin margins, but profitable based on historic financials. Our DD team identified a potential problem at a routine audit - major pre-invoicing/fresh air invoicing incident, with significant consequent cashflow implications.
The director/shareholders initially obstructive - suspicion grew that this was not the only ‘skeleton in the closet’. Financial performance plummeted as the accounting hole unwound.
Bank Credit were understandably very nervous.
Case Study – Plastico Limited
Major Bank relationship with significant facilities. ABL facility added on – ABL Lender uncomfortable. Despite Bank pressure, closely monitored. Owner/management erratic/eccentric. FD a ‘yes man’. Frequent stories of favours to get lenders onside. Huge amounts of cash taken out of the business, but generated via highly attractive working capital cycle (supplier terms very long). Multitude of facility operational issues noted. Messy. Very tight control consequently. Then Hurricane Katrina hit…
Case Study – King Limited and Spades Limited
Satisfactory two sister company business - ID facility in place but full utilisation.
Unexpected call to Lender that due to seasonal problems (sharp drop in business) cashflow had collapsed. Expected Administrator to be appointed in two weeks…