Case Study - Independent Business Review

Paul Stanley

Regional Managing Partner

2 Minutes to read

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Independent Business Review – Property Sector

Updated: 5th May 2020

Background

The business is a multi-branch estate agency, which provides a sales agency service along with residential letting. It is a lifestyle business and a well-established partnership.

Situation on Appointment

The bank had personal covenants which were valueless as security cover.
Lettings cash had been misused and repayments of deposits needed to be put on trust accounts to comply with changing legislation.
The estate agency market had been hit by the recession whilst lifestyle costs remained high.

"The Bank requested an Independent Business Review (IBR) in which we identified cost savings and debt restructuring that ultimately saved cash for the partnership and strengthened the serviceability covenant."

Approach and Outcome

The Bank requested an Independent Business Review (IBR) in which we identified cost savings and debt restructuring that ultimately saved cash for the partnership and strengthened the serviceability covenant.

We also recommended that an LLP structure was implemented, which will result in a debenture for the bank to cover the lettings book and ultimately give the bank greater than one-to-one cover against their existing performing debt position. The debt is also structured to cater for seasonal trading and to further enhance the business’ working capital cycle.

The business had previously been poorly advised about the benefits of an LLP structure. Our tax specialists worked with our restructuring team to improve their understanding of the ramifications of such a change in structure, for which material added-value was derived by the customer and the bank. This was an excellent example of a multidisciplinary team working together to ensure the most satisfactory outcome for the bank and business.