Case Study – Promotional Gifts Supplier

Thu 09 Jun 2016

Mazars LLP were introduced to this company by their funder. The company had been struggling to make a profit for a number of years and the director wanted to consider being able to retire in due course. The director had approached a different firm originally to assist him with a proposed management buy-out however the funder was unable to support his choice of insolvency practitioner due to their internal protocol.

Mazars had to work with the company, the director and the funder to achieve a sale of the business in a very short period of time. The potential offer that the company had received via its management was only available for a limited period of time as there were concerns that the value of the business and the inability to provide customers with their orders would affect the value of the goodwill if the sales process was drawn out, and it was further complicated by the company’s trading model, whereby third party suppliers would provide the items with which the company would either produce the finished item internally or the third party supplier would produce the finished item themselves. Some of these key suppliers had not been paid for a number of weeks, meaning that it would be even more difficult to finalise orders.

An alternative interested party was sourced through the Mazars client base and although initially there seemed to be material interest due to this party being a competitor and understanding the market and customer base, after reviewing the figures and calculating the costs of redundancy, as this party was interested in the customer base as a bolt on to its existing business, they decided not to pursue the matter further and an offer was not forthcoming.

As a result, the business was sold as a going concern to the connected party via the management buy-out, safeguarding the existing jobs and ensuring that a better return would be achieved than it would have been had trading ceased.