Cottage Delight bought by Vestey Holdings, RSM provides advisory

19 December 2016 Consultancy.uk

Family owned fine food producer Cottage Delight was recently sold to Vestey Holdings, a fourth generation family foods business. RSM provided Corporate Financial advisory to the vendors for the deal.

Cottage Delight started life as home made goods sold at farmers’ markets, before, blossoming organically into a medium sized family business selling more than 700 speciality foods, either made by its founders or sourced from artisan producers across the UK and Europe. The company has, in the intervening years, stayed true to its authentic beginnings, focusing on the independent retail trade.

Nigel Cope, the founder of Cottage Delight, says, “Cottage Delight has grown beyond my wildest dreams since I started out over 40 years ago. We have worked together as a team to develop a strong business with an unwavering focus on the quality of our products and our customer service."

Cope recently revealed that he has sold his business to Vestey Holdings, a fourth generation family-owned food and farming business. The UK headquartered holding company operates in 70 countries with six subsidiaries, delivering a range of products in the meat, fish, seafood, dairy, fruit, vegetables, specialist meal, and convenience categories.

Cottage Delight bought by Vestey Holdings

Commenting on the sale to Vestey, Cope remarks, "I have always been proud of our position as a family business and Vestey – still family owned and controlled after four generations – shares our belief in the importance of a family ethos and quality customer service.”

Corporate Finance advisory for the transaction – terms of the deal have not been disclosed – was provided by RSM. The firm’s Corporate Finance advisors Ian Latham, Helen Brocklebank and David Baggott supported the vendors with financial advisory, while Knights Professional Services acted as legal advisors to the shareholders.

Ian Latham, a partner in RSM's Corporate Finance arm, says, “It was vital to Nigel to find the right home for the business that preserved Cottage Delight’s passion for quality and cultural integrity. I am delighted that we have been able to help Cottage Delight to secure the right partner in the form of Vestey to support the business in its continued success.”

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8 tips for successfully buying or selling a distressed business

18 April 2019 Consultancy.uk

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.