Begbies Traynor quickly sells Bestival out of administration

03 October 2018 Consultancy.uk

Professionals from Begbies Traynor wasted no time in finding a buyer for the music festival Bestival, after it collapsed into administration earlier in September. The Bestival and Camp Bestival music festivals have been snapped up by a multi-millionaire Dorset entrepreneur in a matter of days.

Bestival is a four-day music festival held in the south of England. It was initially held annually in late summer since 2004, at Robin Hill on the Isle of Wight, however in 2017 the festival relocated to the Lulworth Estate in Dorset. The move was not without its problems, and the group behind the festival collapsed into administration in September 2018, just months after the latest instalment of the event – which was headlined by the performers Chaka Khan, Grace Jones and Thundercat.

Julie Palmer, of consulting firm Begbies Traynor, was installed as administrator, was not short of viable options for the sale of the group. According to Palmer, there were multiple offers for the business on the table, however the one which one out belonged to one of the group’s creditors. The Richmond Group, controlled by the loan broker James Benamor, has purchased the festival business after offering £1.1 million for Bestival’s assets and brand. The Dorset-based lender had provided Bestival Group £1.6 million in February 2017.

Begbies Traynor quickly sells Bestival out of administration

Bestival’s sister festival, Camp Bestival, is also part of the deal, and the deal comes just in time for the family-targeted event, which is faced with a large number of refund requests, having been forced to shut early due to bad weather. The line-up featured Simple Minds and Rick Astley alongside children’s characters Peppa Pig and Paddington Bear. The company said the cancellation of the festival’s Sunday line-up this year was not the reason for its financial difficulties, but said it had not been “a positive factor for the business”.

At the same time, with the next Camp Bestival having already sold tickets, Richmond Group said that under the terms of its offer all Camp Bestival 2019 tickets sold so far would be honoured. On the Camp Bestival website, meanwhile, the company said that tickets for the 2019 festival remained valid and there was “no reason to believe Camp Bestival won’t go ahead as planned.”

In a statement, James Benamor, who controls the Richmond Group, said, “We have been fans and supporters of Bestival since the beginning. Our children have grown up with wonderful memories of these festivals. Bestival is an example of Dorset being world class and we are keen to ensure that this fantastic institution goes on to delight families and local businesses for many years to come.”

Related: Begbies Traynor administrates GinFestival.com as gin bubble threatens to burst.

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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.