CBRE launches investment consulting arm for Hotels

25 January 2016 Consultancy.uk

The Capital Advisory team of real estate consultant CBRE has launched a new practice dedicated to the hotels sector. The new unit, headed by Philip Cropper and Ian Corfield, will advise clients across the hotel industry on among others equity and debt funding, mergers & acquisitions and restructuring.

Formerly known as CBRE Real Estate Finance, CBRE Capital Advisors is the real estate investment banking unit of CBRE. The arm supports clients with a range of financial advisory services, including Merger & Acquisition advisory (transactions, due diligence, fairness opinions, etc), Capital Raising (private placements, fundraising, etc), Restructuring (capital structure), IPO advisory and Valuation (corporate valuations, asset management, etc).

CBRE Capital Advisors works across industries, and on the back of its growing work for clients in the hotel & tourism sector, the unit has decided to bundle its sector expertise into a new service line. To lead the new corporate finance initiative focused on the hotels sector the company has appointed Philip Cropper, Vice-Chairman EMEA Hotels, and Ian Corfield, Head of Corporate Finance EMEA Hotels.

Philip Cropper, Ian Corfield

Cropper joined CBRE in 1985, working in the Valuation, Central London and Investment Consulting teams. He established CBRE’s UK Real Estate Finance division in 2005, of which he was Chairman. In his new role Cropper will predominantly concentrate on the further growth of CBRE’s Hotels business with a particular focus on strategic advisory work and innovative solutions specifically for European institutional clients.

Corfield joins CBRE with more than 25 years of experience, having previously been Partner at Grant Thornton prior to which he was a director at KPMG. He has advised both borrowers and sponsors alike on the raising, refinancing and restructuring of capital structures across the economic lifecycle.

“The combination of CBRE Hotels’ sector expertise and Capital Advisors’ Corporate Finance capabilities, incorporating Strategic Advisory, Equity Placement and Debt and Structured Finance, is a compelling proposition; one that is focused on our clients’ objectives with a comprehensive advisory and transactional service offering,” says Richard Dakin, Managing Director of CBRE Capital Advisors.

Cropper adds: “The hotels sector has grown exponentially over the last few years, and what was previously seen as an alternative real estate asset has become far more mainstream. As a result there are now a swathe of both new investors and lenders taking an active interest in the sector. We know our clients are increasingly looking for advice at a strategic level that can help not only build on their hotel portfolios across the region, but also derive enhanced value out of them.”

×

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.