Business sale achieved during lockdown, preserving all jobs

Over the past few months, our business recovery team has been working hard to assist businesses and get them through this challenging time.  They have provided much needed advice and support to formulate and implement appropriate strategies to enable a positive outcome.  Here director Nick Brierley discusses a recent business sale which enabled all existing jobs to be preserved.

Business Sale via Administration preserving all existing jobs

• The company, a fashion e-commerce business has been looking to raise funds over the last two years.
• However, as a result of a difficult trading period running up to lockdown and immediately thereafter (website traffic reduced from c10,000 sessions to under 1,000) and the significantly reduced income, meant that cash availability was insufficient
• The company undertook a financial modelling exercise which took into account the government support available and forecasted (reduced) income as a result of Covid-19 but, in each scenario, it was apparent that insolvency advice was required. Furthermore, a CCJ was received from a creditor.
• In mid-April, the Company formally engaged Cowgills to access the position and provide formal advice.
• Subsequent ‘meetings’ were held virtually, and it was established that the major value in the business was its intangible assets, comprising of the brand and Intellectual Property Rights.
• Utilising the expertise of independent valuation agents, information was gathered to very quickly market the ‘business’ for sale, whilst the company was protected from its creditors during a period of Moratorium.
• The business opportunity was marketed on Cowgills’ website, our agents’ website and via an electronic ‘mail shot’ to over 12,000 interested parties.
• During this process, we engaged with the secured lenders and provided them with a strategy that they were satisfied with. Again, the use of video conferencing and conference calls was paramount to this.
• Having received interest from several parties, negotiations ensued, and four offers were received; however, three of these were for only the assets of the business and did not include a transfer of the current workforce.
• One party did, however, make an offer for the business and assets which was inclusive of a transfer of the staff. This offer was the second highest in terms of the price paid, but it served to reduce creditor claims by transferring the employee liabilities and, importantly, it proposed to preserve all six jobs.  Accordingly, this offer was recommended by our agents and after agreement of a sales contract and, again, all discussions were undertaken remotely and using technology.
• A sale was completed in May, very shortly after our appointment as Administrators.
• By completing the sale, we demonstrated that despite not being able to meet face to face with the management and staff, we were able to utilise the technology available and our professional advisors, to maximise the outcome for creditors and preserve all employment.

If you would like any further information or advice, please do not hesitate to contact Nick directly: nick.brierley@cowgills.co.uk