KPMG acts as joint administrator to Jones Bootmaker sale to Endless

30 March 2017 Consultancy.uk

Iconic shoe retailer Jones Bootmaker will continue to operate in the UK, following the sale of the company to Endless, a UK-based private equity firm. The shoe retailer will see 25 of its 97 stores close, while around 840 jobs in the UK will be retained. KPMG was the joint administrator to the deal, the value of which was not disclosed.

Jones Bootmaker was founded in 1857 in London, by Alfred and Emma Jones. The company expanded on the back of the Jones’ large family, 11 sons and 3 daughters, with 9 sons opening additional stores across England. In 1955 the company joined the Church & Co group, which allowed it to continue its growth trajectory, with a further sale of the company in 2001 to a private investor. Over the years, the company grew to more than 100 branches throughout the UK. In 2015 the firm was bought out by Alteri Investors, with funding from private equity firm Apollo Global Management.

Endless is a UK-based private equity firm, focused on buyouts, non-core businesses, refinancings and turnarounds of between $10 million and $1 billion in the UK market. The firm has offices in Leeds, London and Manchester.

KPMG acts as joint administrator in  sale of Jones Bootmaker to Endless

The sale of Jones Bootmaker to Endless was recently announced. The sale will see 72 stores sold, which secures around 840 jobs in the UK. A further 25 stores will be closed, largely due to their underperformance, resulting in the loss of around 262 jobs. The sales process was overseen by joint administrators from KPMG – the team included Partner Will Wright; Director Steve Absolom and Partner and UK Head of Restructuring Blair Nimmo.

Regarding the transaction, Wright comments that the firm is “delighted” to have been able to “rescue such an iconic UK footwear brand as Jones Bootmaker, including a high proportion of stores and preserving a large number of jobs, especially given the current economic pressures faced by retailers across the UK. This deal recognises the value of Jones as a strong and popular high street brand with a loyal customer base.”

Absolom adds, “Whilst it is always pleasing to preserve a significant number of jobs, sadly a number of redundancies are to be made at the closed stores. Over the coming days, our priority is to ensure all employees who have been affected by redundancy receive the information and guidance they need in order to claim monies owed from the Redundancy Payments Office.”

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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.