Chocolate retailer - case study

• Annual income – c. £15.7m
• Number of employees – c. 40

With significant trading challenges and unsustainable losses leading to a material cash flow requirement on the horizon, an Options Review was carried out to determine the best way forward.

Situation

The Company operated an innovative business model to become a successful global social enterprise for cocoa producers and customers.

Shareholder and board member turbulence contributed to declining profitability exacerbated by market saturation, aggressive competition, and the level of fixed cost overheads.

Shareholder disputes threatened the underlying credibility and funding of an appropriate restructuring and turnaround plan.

Approach

An Options Review focused on the short-term cash flow of the business and highlighted the key risks and benefits of a range of solvent and insolvent strategies.

We evaluated the likely impact to stakeholders and creditors, in particular, the prospect of achieving a potential sale of the Company or business to its principal supplier or via an accelerated mergers & acquisition process.

Working with our valuations team, we considered the Company’s intellectual property portfolio and value.

Impact

With our ongoing hands-on support, our advice resulted in the Directors commencing an accelerated mergers & acquisition process, while negotiations with stakeholders continued in parallel.

Ultimately the Company was sold to its principal supplier without significant disruption to the business, its brand or customers.

All creditors have been paid and investment provided by the purchaser to support the future growth prospects of the business.