Interim Assists in £27m sale

The interim management project was therefore specified as being management of the disposal of the company, working with external professional advisers, via a trade sale. The project fell into three distinct phases – preparation, negotiation and post completion.

Preparation was focused on cash generation (through disposal of surplus stock, debtor reductions and disposal of surplus property), creation of a set of proforma historic financial results and forecasts on a consistent basis, settlements with HMRC and associated actions covering past tax discrepancies and tax schemes, improvements in management controls including health & safety, limited vendor due diligence and preparation of the information memorandum. This phase lasted full time for about 8 months.

The negotiation phase followed the usual pattern from heads of terms through to completion, with typical levels of purchaser due diligence and warranty disclosure. The transaction also necessitated sale and leaseback of the head office and branch properties. Negotiation of the consideration adjuster for working capital centred on demonstrating that the reduction in working capital during the preparation phase represented a return to normal levels and not simply cash extraction which left the company under funded. This phase lasted full time for about 4 months.

The final post completion phase covered agreement of the completion balance sheet, agreement of indemnity claims, escrow releases, tax computations for outstanding pre completion periods and agreement of schedules of condition for each leaseback. This phase had a few intense periods, but was largely of low time commitment over an elapsed period of about 16 months.

This interim management project had three important characteristics, namely provision of expertise not available within the company, value creation and an excellent interim manager/client relationship. As in many owner managed businesses, experience of corporate transactions was limited so the project was able to provide the expertise in a way which was immediately productive and which placed the business in the best light for a trade sale. The value creation aspect was maximising the realisation of value already generated by the owner manager in building the business, this value being at risk of erosion if no action had been taken. Throughout the project the close working relationship and level of trust between interim manager and client helped create the successful outcome.