Business Strategy Cash Management Lending Mergers & Acquisitions Strategy Successes Turnaround Workforce Services

Workforce Services business recovers from Cash Shortage

This small/medium Workforce Service business had multiple divisions including Training, Education, Apprentice placements and Apprentice Network services. They had been in business for over 20 years and had built a solid Balance Sheet, however due to an extended downturn in their primary geographic and industry customer base for Apprentice Placements their board needed better information about the financial impact if the downturn continued.

We updated Monthly Board Reporting to improve transparency of operational performance by division, which highlighted revenue/profitability issues with all divisions. These reports also corrected the financial position of the business, which had not been reported correctly since a business acquisition in the prior year.

We introduced Cash Forecasting which showed declining cash would be problematic within 3-6 months.

The business was effectively asset rich but cash poor – it needed to restructure to operate sustainably, but did not have enough cash to do so. We completed the following Balance Sheet Restructure and additional tasks:

  • Bank funding request (including preparation of 3-way forecasts) resulting in a secured facility sufficient to cover 6-9 months cash requirement during operational restructure.
  • Negotiated sale of property to repay bank facility and provide a suitable cash buffer for operations.
  • Financial Due Diligence for a voluntary merger/takeover of Business A by a larger group.

Result: The Balance Sheet restructure provided the cash necessary to improve profitability to a level that made the business attractive to merge into a larger workforce services group. This merger gave the business additional strategic and operational depth which helped it complete its transition back to profitability and sustainability.

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