KPMG finds buyer for Uvenco to save 170 jobs

11 June 2018 Consultancy.uk

Almost 170 jobs across the UK have been safeguarded, after KPMG administrators successfully found a buyer for Uvenco UK. The ailing vending machine company had been unable to pay off debts of over £1 million, despite an annual turnover of around £15 million.

Trading subsidiaries of collapsed vending machine company Uvenco UK – which holds offices in London, Newport, Blackburn, Coventry and Liskeard – have been purchased by Irish snack company Montagu Group. The group is an affiliate company of Tayto, the foods group which runs the Golden Wonder brand, as well as being a specialist vending solutions provider in its own right.

The purchase is the latest in a succession of purchases by Montagu, which recently acquired coffee and vending machine supplier, Cambridge Vending as well as acquiring Leeds-based Freedom Vending in April last year. The latest deal notably broadens Montagu’s geographical reach, thanks to Unevco’s offices and franchisees across the UK, as well as adding a further £15 million in turnover – placing the group as the largest British-owned vending company.

KPMG finds buyer for Uvenco to save 170 jobs

Montagu Director Paul Allen said, "When we recently announced the acquisition of Cambridge Vending, we were already working on this deal as we see vending and ‘consumption on the go’ as a key area of expansion for us.  This purchase brings us another 12,000 points of sale, giving us a total of more than 25,000 across the group.” 

All employees at Uvenco UK's trading subsidiaries have been transferred across, meaning 169 jobs have been saved by the acquisition, which was overseen by administrators from Big Four professional services firm KPMG. Unevco had appointed Howard Smith and David Costley-Wood of KPMG as joint-administrators just a day earlier, with Unevco’s subsidiaries and their assets (excluding book debts of £1.6 million) sold to Montagu Group for a total consideration of £1.8 million.

Howard Smith, who is an Associate Partner at KPMG, said, “The companies had experienced declining revenues over a prolonged period, significantly impacting cash flows. Following an accelerated sales process, we are delighted to have been able to safeguard all 169 jobs with this sale of the business and assets. We wish the new owners well in the future.”

Related: PwC administrators complete Conviviality sale to save thousands of jobs.

Profile

More news on

×

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.