ABC Group has been trading for more than 20 years and has grown through acquisition into a three business, £10m turnover group including a UK market leading position in its main supply and distribution business.
With a Group structure and growth strategy in place, the founder now sits as Chairman, the company was looking towards a medium term exit strategy.
To ensure maximum value is achieved on exit, In-House Legal support considered it appropriate to build the professionalism, consistency and up to date compliance in all aspects of the business operations, systems and contracts.
Progeny Corporate Law undertook initial fact finding and diagnostics, spending time with the owner and key decision making team to understand the journey the business had taken and their objectives going forward.
The following key priorities were identified:
- Terms of business with suppliers and customers. Making the contracts reflect the business
- Advice on security of tenure of occupation
- Standardise employee contracts / handbooks / service contracts across the 3 individual businesses
- Looking at the corporate governance – inter group positions (loans / obligations) weren’t documented or charged in a way which protect the company who had lent the money
We also identified an immediate working capital need due to a change in terms of trade with the main supplier. Having helped to source a private funder, Progeny managed to help protect the businesses by way of appropriate charges and facility documentation. This way, the funding and security relationship with the main banking funders were not affected.
This was all achieved within seven days from the initial requirement being identified to the business receiving the funds into their bank account.
Progeny Corporate Law is now retained in the business two days per month and our work with the Group includes:
- Any ongoing project work with the company
- Identifying IP arrangements – the company are unsure of what is currently in place, the protections it provides and what they might need for purpose of protection going forward
- Implementing Terms & Conditions into the company, how these are incorporated within day to day business and working with the sales team to start and finish the order and sales process
- Designing protocol to implement standardised working practices across the group companies that don’t upset ongoing and valuable relationships with clients and suppliers
- Providing ongoing advice for all sales contracts achieved and, where necessary, incorporating specific amendments to those contracts with suppliers or customers. In addition, providing commercial risk assessment advice where a customer / supplier insists on client signing their contracts without amendment
A tenure review revealed change of ownership of freeholder so awareness that there might be an impact. Working with the company, we Identified future key dates for renewal of leases and contracts, and created milestones for actions.
In addition, the use of immediate cash to save the business from huge cash flow shortfall or ‘fire sale’ avoided a fall-out with main supplier, while providing immediate protection to the individual companies for intergroup actions that had been undertaken previously. From a HR perspective it created a basis and platform to commence engagement with employees to bring them all under a standard contract going forward.
We standardised and incorporated terms of business within sales process. This now means the sales team are always mindful of the standard terms when negotiating any sales and are able to immediately seek In-House advice if customers wish to alter these standardised terms.
Progeny Corporate Law provided a platform for a longer term exit strategy by building an accepted and up to date compliance and governance protocol.
Furthermore, having access to their own In-House Legal support has started to speed up the management decision making process within the company. This has also brought all facets of the business together within the key decision making process; the owner recognises the value added by having the expert advisers and daily, and weekly, progress updates on hand.
As the relationship deepens and trust continues to build, the key people in the business are using our ongoing In-House support with the knowledge that we are on hand to assist with all matters as they arise. Moreover, this also means that key people understand the process better and how the various functions work. This has the effect of demystifying some of the things they would have previously kept at arms- length as it was outside of their expertise / experience and comfort zone.
The Group are looking at the wider capability and value of contacts and relationships – utilising IT support into other businesses that they work with. In addition to this, they are enhancing the capability of the senior team to look at all aspects of the contractual obligations and operational processes. This ensures that all key staff will examine their own processes and elements of their work to promote a very positive environment where they feel they can contribute. The Group is looking to build towards the longer term succession planning and exit strategy, to start thinking about who likely purchasers might be, and consequently what they would look.