TCII :: Management Consultants
Building Profitable Business
The overhead base was still too high and the company was unlikely to trade out of this situation. We organised a business closure via a Creditors Voluntary Arrangement. This coincided with the sale of two properties. All current contracts were sold to another operator. All creditors were paid 100p in the £ and the cash balance produced a retirement fund for the owners.
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Achieving a positive result from a CVA
The client was an Air transport, warehouse and distribution company turning over: £6m. It was barely profitable and was up against its borrowing levels. The client was a well established family business with a good track record for providing a flexible level of service with its customer base.
Our challenge
Unless current losses were converted into profit the company was at risk of bank foreclosure. The directors were also seeking a positive exit strategy.
What we did
We analysed the trading pattern and established there were too many low margin customers. A secondary distribution business was running a fleet of costly high maintenance vehicles and this was closed.
The client was relying on spot hire work at higher rates, but the market had turned and they did not have enough longer term medium margin work. We undertook over a four month period to target and assist in negotiating a significant long term contract.
There was an in house fleet maintenance unit. This was closed and maintenance was sub contracted saving 15% on annual maintenance costs.
The Outcome
The overhead base was still too high and the company was unlikely to trade out of this situation. We organised a business closure via a Creditors Voluntary Arrangement. This coincided with the sale of two properties. All current contracts were sold to another operator. All creditors were paid 100p in the £ and the cash balance produced a retirement fund for the owners.
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