£20m+ Business Valuation Improvement in 36 Months
A staffing business had won a number of contracts driving 45%+ per annum growth, with sales exceeding £100m for the first time.
The high growth had exposed challenges – low margins and high working capital requirements were consuming cash fast, and combined with weak financial management, meant the business was in trouble.
A valuable by third party accountants put the business worth at £2m. The semi-retired owners, and the bank funding £12m of lending were both very nervous and fearful of business survival
Stabilising the business and then growing business valuation for a potential sale were the goals. This was achieved with a lot of hard work from the fantastic staff. We guided the business to:
- Slowed growth to reduce the immediate cash drain, focusing on survival
- Changed the business model to reduce the ongoing working capital cash investment and release a one-off cash injection
- Focused on reducing the cost of servicing current contracts thus improving margins
- Reduced the effective tax rate of a high value foreign contract
- Slowly re-focused the business on higher value, higher margin new business
36 months later, the business was dramatically different. The business, while slightly smaller, was five times more profitable, had net cash of over £10m, and with a strong finance function was well controlled.
Two separate valuations from top ten accounting firms valued the business at over £20m and potential buyers were interested.
The owners were delighted that the business they had spent decades building was in strong health, and they could retire in comfort and security.