£20m+ Business Valuation Improvement in 36 Months
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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
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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.