Case Study - Independent Business Review

Gary Lee

Partner

3 Minutes to read

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Independent Business Review – Education Sector

Updated: 5th May 2020

Background

An independent school was facing a number of issues, predominantly due to the effects of the economic downturn, but also due to ineffective management and processes.

Situation on Appointment

A decline in pupil numbers and loss-making.
Poor financial management.
No headroom in working capital facilities.
Asset rich, strong LTV, with no cash reserves.
Fees paid in advance and poor disbursement collection.
Staff contracts had notice clauses equivalent to a minimum one year’s pay.
Board of Trustees reactive and not proactive in financial management.

Approach

We undertook an Independent Business Review (IBR) on behalf of the bank, which identified trading difficulties and bank risk, as well as highlighting a staff-to-pupil ratio issue and cash flow pressure points.

"We undertook an Independent Business Review (IBR) on behalf of the bank, which identified trading difficulties and bank risk, as well as highlighting a staff-to-pupil ratio issue and cash flow pressure points."

Outcome

The outcomes of the IBR allowed our team of restructuring specialists to develop and implement a successful strategy to ensure a satisfactory return for the Bank, which was to manage the shutdown via a solvent route (asset sale). Whilst negotiating payment terms with all creditors and cash managing the position for the school and the Bank and therefore, mitigating cash requirements until a sale was completed.

This involved our team working with the Bank and agents to facilitate cash requirements throughout the sale process and manage staff dismissals and redundancy packages through to shutdown, which ultimately mitigated risk and ensured a suitable reward for the Bank.