A business review informs difficult decisions and keeps lenders on-side

Mike was feeling under some pressure. He had just inherited the reigns from his father of the family precision engineering firm, although he already had a career elsewhere.

Business was tough because of foreign competition and especially since the customer that represented over 50% of his business had now decided to move to the Far East. To make matters worse, the bank were asking for investigating accountants from a large firm to report at his expense and who knows how much that would cost and what they would say.

A clear plan of action

Mike's accountants referred him to us. We suggested the merits of carrying out a business review for his sake so that we could provide an independent and expert perspective. We were also able to persuade the bank to accept our work in replace of the firm of its choosing, which made Mike more comfortable.

We took Mike away from the office and did some strategic brainstorming. The result of this was to show as inevitable what Mike actually knew deep down all along:

• The small distance subsidiary was not viable and should be closed
• He should focus on customers and products where quality service could add value and margin
• The workforce could be reduced
• The capital repayment terms of the finance he had used to buy equipment was too onerous

We helped Mike to articulate this plan for his bank in a professional document and supported him as he implemented it.

A successful outcome

We kept in touch with Mike as trading and cash flow improved. Two years later, he received an attractive offer to sell the company. Mike asked us what he should do. We knew that he knew the answer all along but helped him reconcile himself to his father that what he really wanted to do was to get back to his former career.