Deloitte appointed administrator to Rileys Sports Bar

23 September 2014 Consultancy.uk

Deloitte has been appointed as administrator to Rileys Sports Bars, a chain of sports venues that has gone into administration just months after its initial rescuer Greybull Capital put it up for sale. Deloitte will explore future options for the company, and oversee the reorganisation plans.

Rileys Sports Bars is a chain of multi-leisure sports venues, established in 1878 by Manchester entrepreneur Edward John Riley, that specialises in in snooker/pool, darts, bingo and screen sports. The company operates in Birmingham, Coventry, Solihull, Wolverhampton and Worcester, and has more than 500,000 members and about three million customers on a yearly basis. 

Despite this big fan base, Rileys has found itself more than once in financial trouble, as was the case in November 2012 when it went into administration caused by continuing cash flow and trading difficulties. The company was acquired by private investor Greybull Capital via a pre-pack administration*, that saved 625 jobs and 78 clubs. Now, two year’s down the road, the company once again went into administration after failing to fight off creditors, just months after Greybull Capital has put the company up for sale.

Deloitte helps Rileys Sports Bars

Deloitte
Last week, professional services firm Deloitte has been appointed as administrator to Rileys Sports Bars. Robert James Harding and Ian Colin Wormleighton will act as Joint Administrators, and manage Rileys’ affairs, business and property. On coming in, the Joint Administrators immediately closed 15 venues.** This resulted in 104 redundancies and another 20 at the headquarters in Milton Keynes. “Following our appointment it has been necessary for us to implement certain cuts immediately. We are now working to stabilise the business whilst we consider our options for securing the best outcome for the company's creditors,” comments Harding. 

In addition to the 124 lay-offs, another 400 jobs are at risk, but while Harding and Wormleighton explore future options for the company, the remaining 44 venues will trade as normal.

* Pre-pack administration is when the sale of a company is marketed prior to the company entering administration. The company is subsequently sold, often to former directors.

** Closed venues: Belle Vue (Manchester), Cardiff, Coatbridge, Derby, Edinburgh, Exeter, Guildford, Hull, Luton, Peterborough Orton, Peterborough QClub, Plymouth, Rugby, Scunthorpe and Wigan.

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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.