Jobs secured as Quantuma advises BCF Heating & Plumbing

15 November 2018

BCF Heating and Plumbing has agreed upon a Company Voluntary Arrangement, securing the jobs of its entire workforce. The deal, which will see heating and plumbing contractor pay back its creditors in full over the course of a 13 month period, was advised upon by corporate rescue consultancy Quantuma.

With headquarters in High Wycombe, BCF Heating & Plumbing provides installed systems for new build residential properties for local, regional and national builders and developers, servicing the commercial sector nationwide. The company was established in 2006, and achieved a turnover of £1.8 million in the year to March 2017. However, adverse trading conditions, including the increasing cost of importing parts from overseas, saw the firm put under mounting pressure by debtors in 2018.

Now, the group has struck on a Company Voluntary Arrangement (CVA), allowing the company to continue to employ seven employees. This will enable the business to complete all on-going contracts and continue to work on new assignments, while the contractor will pay back its creditors in full over the course of 13 months. CVAs have become a popular method of staving off administration in recent times, as they allow embattled companies to avoid administration while offloading underperforming stores and reducing rent costs.

Jobs secured as Quantuma advises BCF Heating & Plumbing

Business advisory firm Quantuma advised BCF on the CVA. Partners Nick Simmonds and Chris Newell were appointed from Quantuma to advise the management team in formulating the proposals, which were approved 23rd October 2018.

Commenting on the CVA, Nick Simmonds remarked, “Despite the growing number of customers seeking the specialist services of businesses across the plumbing and heating industry, small-to-medium sized enterprises are facing real pressures from escalating business rates and general market uncertainty. These factors contributed to BCF’s position, leading the business to seek our expertise. By entering a CVA, the company’s entire workforce has been preserved, operations can continue, and creditors will be paid back in full - a good outcome for all concerned.”

Chris Newell meanwhile highlighted the importance of seeking help if a business is struggling, adding, “We continue to advise small-to-medium enterprises who find themselves facing insurmountable challenges as a result of market unsteadiness. The first step businesses should take when faced with difficult circumstances is to consult the expertise of restructuring specialists. As a result of our swift consultation period and careful negotiations, we were able to retain all employee posts at BCF, providing security for both the staff and customers of the company.”

Difficult trading conditions

Quantuma has seen a busy 2018, as a number of previously up-and-coming UK businesses have floundered amid difficult trading conditions. The business advisory firm specialises in corporate recovery and administration procedures, with offices in London, Southampton, Bristol, Marlow, Watford, Brighton, Birmingham, Manchester, Ringwood and Weymouth. Thanks to growing international demand, in July 2018, the firm also opened two international offices in Cyprus.

Earlier in the year, the firm was tapped to oversee the administration of British-based mobile phone maker WileyFox. The beleaguered technology firm entered restructuring procedures following a catastrophic 2017, which saw numerous projects either delayed or jettisoned. Elsewhere the consultancy recently helped preserve a number of jobs in London after Chelsea Apps Factory fell into administration earlier in the summer. In an uncommon turn of events amid a booming digital consulting industry, the firm succumbed to heightened sectorial competition; however it was quickly sold by Quantuma administrators, saving the firm’s value and some 42 remaining jobs.


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8 tips for successfully buying or selling a distressed business

18 April 2019

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.