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Diverse Family Organisation | Business Turnaround

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This diverse group of companies was suffering from lack of direction and a shortage of cash. Positive action was required…

Diverse group of family businesses – turnaround and restructure


Situation

This family-owned horticultural company had acquired farming interests and diversified into engineering and property businesses across the south of England. However, trading losses, poorly controlled capital spending and high interest rates had taken debt to a risky level. We became involved when the bank had given the directors seven days to find a solution.

The situation was exacerbated by a complex shareholding structure among the family members and a series of cross-guarantees for the debt that were potentially subject to legal challenge.

Action

Sell underperforming businesses and reduce debt

John Playfair was appointed CEO and persuaded the bank to allow time for a structured reorganisation to take place. An initial business review resulted in the closure of the engineering business and the sale of surplus assets, reducing the bank debt. John assumed direct control of the remaining businesses, introducing strict financial controls and cutting costs.

Reorganise core businesses

A new top-level board was elected and the management of each business reorganised. Further reviews and rationalisation led to the sale of the horticulture business. This changed the focus of the business towards property ownership and management, resulting in a higher return on capital.

Define new ownership structure

John negotiated a new shareholding structure with the family, buying out some minority shareholders and giving ownership and control to the individuals running the business.

Outcome

The turnaround and reorganisation of this diversified company produced a net cash inflow of more than £3 million, eliminating all debts and funding investments that now generate good dividends for shareholders. The businesses are profitable, with forward-thinking management teams, strong balance sheets and growth opportunities.

Playfair Partnerships continue to act as a business advisor to the group.

Testimonial

“John walked into a hornet’s nest of business problems that had hitherto seemed insoluble. He took decisive action to unravel a complex family shareholding structure, had the courage to implement difficult and unpopular strategic decisions, and the energy and dedication to find workable solutions. Thanks to John’s business experience, financial acumen and long-term vision, the business is now streamlined, debt-free and profitable”. – Director & Shareholder

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