Phone call received this morning from a client that I have had for 5 years, thanking us for all the help we have given them over the last 5 years or so. They have been an exemplary client.
We signed them up when their employer went bust through lack of investment and we provided the loans so that they could buy the firm. The staff; existing managers, production and office staff came to us when they got a price from the liquidator and most invested what they could.
They borrowed to buy the premises and plant and more to actually invest in the business with new competitive machinery and IT systems.
Personal guarantees and mortgages on personal property were taken, so their homes were literally on the line (though as a matter of policy we have never kicked a family out of a home, it focuses the mind).
The phone call was to say that they were going to be repaying all of their loans, mortgages including early settlement fees etc. today as they have had an offer that they can't refuse for the business from a company with exceptionally deep pockets that is not currently in their industry but wants to be, and needs the proverbial "foot in the door". They had apparently been looking at them for some considerable time.
This afternoon all their loan account balances were zero and a six figure sum was paid in to the businesses current account for cashflow.
I have never seen such a multiplier of earnings paid for a business and all the existing owners get shares in the new firm to keep them keen. The purchase price will make them wealthy.
It's good to leave on good terms and for the right reasons.
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Good for them.
Karma is a thing.
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Great news.
What is p***g me off at the moment is some companies with deep pockets full of cash are buying what under normal circumstances would be well performing businesses, but due to lockdown are on the verge of failure (I don't mean Debenhams or Arcadia).
The shareholders/directors/staff of target company lose capital/reputation/jobs for reasons completely beyond their control but, the buyers having acquired assets and goodwill for a small percentage of pre/post lockdown value, will in a few months be sitting on huge profits for little effort.
You could say right place right time, but it's very unfair.
But your client has clearly worked hard and taken advantage of the previous management's inability to run the business. That is fair.
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>>What is p***g me off at the moment is some companies with deep pockets full of cash are
>>buying what under normal circumstances would be well performing businesses, but due to
>>lockdown are on the verge of failure (I don't mean Debenhams or Arcadia).
I have seen a few cases of FTSE and larger AIM companies hold payments on key subcontractors with the specific aim of driving them to the wall so that they can buy them up for pennies in the pound.
They pull all of the tricks in the book, from oh, your invoices never arrived, there is a query with the invoice value, can we have a delivery note, to major disputes that do not really exist.
In a couple of instances I know our divisional Managing Director has got on the phone to equivalents in the aggressor business and made it clear that to avoid appointing receivers, we will fund appropriate legal action to recover all payments due as well as posting appropriate markers with the credit insurance industry.
I also know that a couple of such instances have been referred to the financial crime department, to see if it is appropriate to refer such action to the authorities (though I suspect that the authorities would have difficulty in proving anything would it would be expensive and difficult. I also suspect that they would be very caution in taking such a big organisation to court on criminal charges.)
Last edited by: zippy on Thu 25 Feb 21 at 13:17
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Lost a client for all the right reasons - No FM2R
