Business Turnaround is the talk of the town currently. Well, if we’re honest, it has been the talk of the town for many years already – and with organisations trying whatever means possible – be it through acquisition, mergers or adopting new leadership strategies, turning a failing, or under-productive business around appears to be as common as the cold. With more industry giants hitting our headlines, business distress is no longer spoken about in hushed tones, but appear, more and more so, in the headlines over our morning cup of coffee.
The CFPro Ventures team has been helping organisations for many years to re:focus their activities – strategic repositioning, corporate structuring, improved productivity and regaining profit share. For many of our clients, however, it’s not always a case of saving them from distress, but more so to uncover un-productivity and value-loss, and changing course towards profit. And because sometimes we all need a bit of practical eyes-on, we’ve put together a working case example of just what that may look like.
Our client bought a substantial group that requires a lot of their time and effort to bring onto an even keel. Included in the acquisition was a much smaller, stand-alone business, one with a few hundred employees and turnover in the tens of millions. The business is not burning cash, has not embarrassed its owners nor is it taking up any management time. So there is no real reason to invest scarce resources into this organisation.
However, the business is destroying value. With single digit growth and EBITDA that is at least 10 percentage points below industry top quartile performance, there is the opportunity to increase enterprise value by some 350%. It is with such opportunities that CFPro Ventures can add value – we take responsibility for delivering success and bring the necessary skills and resources to deliver value.
So, how do we change that?
We’ve worked with companies in all stages of their business life-cycles, of all sizes, across most sectors. And we are well-placed to recognise critical risk areas and implement improvements. We know that all large organisations will have weak spots with areas that require improvement. But there is one group of businesses within the larger community which may not be capturing the headlines as much, and possibly hold an even bigger, more critical need for a Re:Focus, and that’s the SME Community.
These are the businesses who may not even be aware of the impending distress signals, or those who are simply not performing, and heading for eventual slow-down, and ultimately, stagnation. And because timing within the SME community is even more critical, it means that our hands-on, no-nonsense approach gets to the heart of the problem quickly, activating improvement methods from day one.
We delve into the problem and take control of the venture’s performance. We review the organisation’s financial records extensively and, depending on the situation at hand, commit to a number of outcomes based on our involvement and proposed changes. Some of these could include committing to increasing revenue by a certain amount that suits the organisation and our strategy, comfortably. Some may be to achieve a certain level of operating margin according to key time periods. Some may also be to work with the organisation towards an achievable exit as part of the ongoing growth strategy. In many cases, it may be a combination of all of these. But whatever the project, we tailor an approach that works best for the organisation, and the long-term vision of where they want to be as a group. And in a working case example like this one, would confidently be able to generate additional value of up to £32m.
Naturally, every business is different, and therefore every approach should be too. But the difference with us is that we have a proven track record of business turn-around, and we build our results based on provable, deliverable experience, where SMEs thrive and growth is exponential.
Isn’t it time that you start to address those under-the-radar parts of your organisation that may not be costing you anything, but is losing you a lot?
It may be time to speak to us.