Early-stage business restructure and turnaround leading to an AIM listing

Our client ran an early-stage internet-based business. At the time we were retained, it had been operating with limited success. Revenues were modest, the monthly cash burn was imposing, and cash was rapidly running out. The company had attempted to raise additional finance, but without success.

Our challenge

Our task was twofold: to restructure the business to stretch its limited cash resources as long as possible, and position the company so that it would be able to raise finance to fund its growth phase.

What we did

The immediate issue was preservation of cash. We undertook a detailed cost review. This identified duplication and inefficiency among the team, disjointed and poor execution, and a lack of cohesive, effective supplier relationships.

We restructured the management and team to eliminate duplication and bring greater focus to business execution. We also introduced competitive buying practices. This resulted in significant savings and the available cash resources being stretched a further four months, thus providing management with much needed breathing space.

We then turned our attention to positioning the company for the next funding round. It became evident that the existing business plan and the underlying business model the company had adopted were unworkable, and that financing the business would be virtually impossible.

Management accepted that contention and commissioned us to completely restructure the underlying business model and write a new business plan.

We proposed additional complementary business units to leverage the existing business operations, introducing a vertically integrated business model with a 360° business perspective (well before they became popular). This not only created the potential for multiple revenue streams, but also introduced the notion of recurring revenue streams – which, in turn, resulted in greater enhanced value and, potentially, a higher multiple on exit.

Management adopted these initiatives and then commissioned us to execute the proposals and integrate the new business units into the existing business.

The outcome

Before the existing cash resources expired a successful IPO on AIM raised £3 million, underpinning the growth phase of the business.

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