Restoring Stability and Securing a Successful Exit
- No. of employees
- The challenge
- Get the firm's finances back on track and implement a succession strategy.
- We led a partner workshop, prepared a recovery business plan and introduced the partners to another firm who were looking to merge.
- The firm was able to merge successfully and all partners were able to exit on terms acceptable to them, either as partners or consultants in the larger firm.
This was a firm with serious financial issues and an aging partnership, a target for aggressive approaches from competitors. With our help, the partners were able to exit on acceptable terms following a two-year programme to restore their finances and assist them in merging from a position of stability.
A long-established firm in a major city, three of the five partners were over 60 years of age and around 40 people in total worked across property (residential and commercial), private client, company commercial and litigation departments. With revenues of around £2m, profitability well below benchmarks, and borrowings approaching six months’ turnover, the priority was to get the firm’s finances back on an even keel in order to provide headroom for a succession strategy to be implemented.
Having conducted seminars in the area, attended by two of their partners and their bank manager, it was agreed that we should meet and we were commissioned to undertake an in-depth review of their situation. We conducted our usual thorough analysis of their data and systems and interviewed all key people, identifying opportunities to generate cash and reduce borrowings, as well as areas of underperformance that we could help to address.
We led a partner workshop to agree a way forward and prepared a recovery business plan, upgrading management information and training key staff on basic financial management. Our mantra of ‘no surprises’ became a watchword, introducing a comprehensive system of financial forecasting and acting as a conduit to the firm’s bank. This programme of work helped to regain stability and allowed the partners to consider the issues of succession and development.
Following the avoidance (with our help) of an unpalatable takeover, we introduced the partners to a larger firm that was keen to grow and we helped them to negotiate suitable packages. Over the course of two years, we helped in a very hands-on way with some of the more difficult aspects of the recovery programme.
As a result of our work, the firm was able to merge successfully and all partners were able to exit on terms acceptable to them, either as partners or consultants in the larger firm.
By focusing on cash flow and bringing borrowings under control, the firm was able to manage the exit process in its own time, and to find a new owner with compatible aims and ethos. This was a case where the old adage ‘cash is king’ really did ring true.