Quantuma advises on rapid sale of home improvements company

31 January 2019 Consultancy.uk

Restructuring consultancy Quantuma has advised on the sale of home products company Apple Panels, which traded as Apple Home Improvements, to conservatory and door supplier County Windows. Quantuma completed an immediate sale of Apple Panels – which had appointed the firm as its administrator on the same day – though this was still too late to save more than 30 jobs at the company.

Following a busy 2018, as a number of previously up-and-coming UK businesses have floundered amid difficult trading conditions, business advisory firm Quantuma has commenced the New Year with a flurry of further administration engagements. The business advisory firm specialises in corporate recovery and restructuring procedures, with offices in London, Southampton, Bristol, Marlow, Watford, Brighton, Birmingham, Manchester, Ringwood and Weymouth. The firm was recently appointed the administrator for Manor House School following the private educational facility’s acrimonious closure.

Now, Quantuma has advised on the sale of home products company Apple Home Improvements to conservatory and door supplier County Windows. Founded in 2000, Bournemouth-based windows, doors and conservatories provider Apple Home Improvements had showrooms in West Parley, Southampton and Weymouth, and a turnover of £11 million, but ceased to trade before Christmas, with the loss of 34 jobs in the process.

Quantuma advises on rapid sale of home improvements company

The firm seemingly succumbed to a combination of challenging market conditions and difficulties with accessing working capital from financiers in a timely manner. Quantuma was then initially contacted to assist with the liquidation of Apple Home Improvements’ assets; however, the consultancy’s team soon realised that there were actually a number of interested parties which would make a sale possible.

As a result, joint administrators Andrew Watling and Simon Campbell were able to immediately complete a pre-pack sale of the business upon their appointment on 23 January 2019, with the assistance of solicitors Steele Raymond and quantity surveyors Kinetica Consult. The sale to Winchester-based County Windows is set to safeguard outstanding customer contracts and enhance recoveries for the benefit of creditors, while the company will relaunch branches in Southampton and Bournemouth, with a trading catchment from Weymouth to Chichester and up to Guildford.

Commenting on the sale, Southampton-based Quantuma Partner Andrew Watling said, “It became clear that there were several other companies who were interested in its work-in-progress and contracts. Because of the particular circumstances involved, the value of these were diminishing on a daily basis, and so we embarked on a period of marketing and subsequently received a number of offers from potential buyers. By seeking our advice and expertise, the Director of Apple Panels ensured that we were able to find a solution that should improve the outcome for many creditors and consumers – a positive result for the region.”

Quantuma was recently involved in another home improvements restructuring. That saw BCF Heating and Plumbing agree upon a Company Voluntary Arrangement, securing the jobs of its entire workforce. The deal will see the heating and plumbing contractor pay back its creditors in full over the course of a 13-month period.

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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.