Key achievements by our turnaround experienced Virtual Finance Director:
* Re- banking during Financial Crisis
* Negotiated Funding for equity
* Business Resizing
* Cashflow management during exceptionally difficult business environment
* Managed banking relationship to ensure on going support
* Negotiated with Customers to accelerate payments
* Negotiated payment plan with HMRC
* Concluded sale with large Software business
Background – Autumn 2008 Banking Crisis
The business had performed exceptionally well over the previous 3 years growing to £7m T/o with $8m revenues in the US. We were poised to continue strong growth with a $3m contract with The Home Depot and a $2m contract with another major rental business both at contract signature stage. Within weeks of the Lehman failure both companies pulled back. THD put a total
embargo on Cap Ex and the rental company realised it was also vulnerable to the much-changed market.
Bank Re-Financing Need
At the same time in the UK the government was forced to bail out RBS and HBoS (which they persuaded Lloyds to buy). These changes caused major problems for our business, as we banked with HBoS for working capital but had mezzanine investment from RBS. HBoS took the view that they no longer wanted our account as they weren’t there to support a company that RBS had backed with equity.
RBS equity arm were then faced with the difficulty of bringing on board our working capital funding. In the then very difficult business climate none of the normal relationships managers wanted a new client where it’s business had seen a significant hit overnight.
Ultimately I was able to agree a refinance based on RBS obtaining additional shares, the refinance moved us into RBS’s GRG group. I worked through the complex legal process of re banking changing securities etc. The whole process took about 6 months.
Alongside side the re-banking we went through a significant resizing exercise, reducing staffing levels from around 90 down to just under 60 to better match the business activity.
We continued to win new business but at a lower rate than before, the US market where 65% of our business had come from had fallen 40% within a year, and was not to recover to 2007 levels until 2014.
Although we had reduced staff we maintained a core of very experienced developers and built out mobile apps and a site portal which enabled us to secure customers such as Balfour Beatty.
Trading through & Business Sale
With the lumpy nature of the business we sometimes had short term cash issues, and turned to clients to help with cash by accelerating payments. We were also able to negotiate a payment plan with HMRC. Both of these actions helped to smooth cash as we waited for larger payments received when new contracts in the pipeline were signed.
Although many businesses have been critical of RBS’s GRG, we received considerable on going support for the business, as they recognised the business potential. I maintained a close relationship, keeping them fully informed of both positives & negatives. RBS were astounded that a company our size secured a contract with Balfour Beatty for £1m in probably the worst business climate in living memory, and eventually secured the major rental business lost in 2008 in a $2m deal.
Ultimately the business was sold to a major multi billion Canadian software business.
“I was Chairman working with David between 2012 and 2015, in one of the most difficult business environments for a software business. David was a key member of the team keeping everyone focused on delivering business and driving cashflow. Without David’s clear understanding of the issues, strategic thinking, willingness to address opportunities and problems head on, I believe the outcome would have been very different. David was the cornerstone of the management team.”
James W – Chairman