In the competitive landscape of workforce services, longevity is often a testament to adaptability and resilience. Our client, a small-to-medium-sized business with over two decades of experience and diversified services in Training, Education, and Apprentice Placements, found itself at a crucial crossroads. Despite a robust Balance Sheet, an extended downturn in their core markets began eroding their financial health. The board recognized the urgency to understand the full scope of the financial implications if the downturn persisted.
Financial Transparency: A Revised Monthly Board Reporting
Our first step was to revamp the Monthly Board Reporting. Our newly implemented system brought acute transparency into each division's operational performance. Not only did this shed light on issues of revenue and profitability across all departments, but it also rectified inconsistencies in the financial reporting that had persisted since a business acquisition the previous year.
Anticipating Cash Flow Crises: The Introduction of Cash Forecasting
We integrated Cash Forecasting into their financial management, which revealed a bleak outlook: within a 3-6 month window, declining cash would jeopardise operations. Despite a seemingly strong asset base, the business was essentially "asset-rich but cash-poor." The need for a structural overhaul was clear, yet the cash reserves for such a transformation were lacking.
Engineering Financial Stability: Balance Sheet Restructure and More
We undertook a multi-pronged strategy to fortify the company's financial foundation:
Bank Funding: We prepared comprehensive 3-way forecasts and facilitated a bank funding request. The secured facility was sufficient to cover cash needs for 6-9 months, aiding the business during its period of operational restructuring.
Property Sale: We negotiated the sale of a property, which not only repaid the bank facility but also provided a crucial cash buffer for ongoing operations.
Merger/Takeover Due Diligence: As the business became financially healthier, we conducted thorough due diligence for a voluntary merger with a larger workforce services group.
The Turnaround: A Merge into Sustainability
The result was transformative. The restructuring provided the liquidity needed to elevate the business to a level of profitability that made it an attractive merger candidate. This union endowed our client with additional strategic and operational depth, culminating in a successful transition back to both profitability and sustainability.
This success narrative encapsulates Ascern Advisers' commitment to delivering tailor-made financial solutions that not only navigate immediate challenges but also set the course for long-term resilience and growth.