This technology SME had a workforce of 250 people and a turnover of €30m (France €20m, Belgium €10m). The founder and Chairman-Managing Director had become a minority shareholder and the company had become burdened with debt as a result of LBO and industrial investments. Following badly controlled external growth and a slower-than-anticipated launch of new products, profitability was in freefall with tight operating cash flow and an inability to meet medium-term debt. The Chairman-Managing Director was losing the confidence of his creditors. Globalise was briefed to identify the source of the company’s financial difficulties and implement actions that would bring the company back onto the path of profitability, as well as to prepare for renegotiation of the bank debt.
Over the first two weeks, in collaboration with Chairman, the Globalise transition partner and manager analyzed the short-term cash-flow situation, results and development prospects for the current year. They then defined a strategy that was to be adopted for the Belgian subsidiaries and prepared the strategy for renegotiation of the bank debt. The situation was much more critical than anticipated, with the Group’s cash flow proving to be very tight. The two Belgian companies taken over a year before had a structural deficit and risked forcing the Group into receivership in the short term. It was therefore necessary to act very fast. Via our network, Globalise brought in a Belgian lawyer specializing in companies in difficulties. One of the subsidiaries was placed into liquidation, the other into receivership. All French companies, including the holding company and the operating company, were placed under the protection of a specially appointed administrator to gain time to properly negotiate the refinancing, in complete confidentiality. In the second part of our assignment, the Globalise manager revised the business plan and cash-flow plan in collaboration with the company’s management.
Within just one month, the Globalise transition team had established a precise diagnostic of the difficulties and had put in place emergency measures that ultimately saved the company. Following negative profitability in the first half of the year (-10%), the company broke even again in the second half of the year without having to reduce its workforce in France. The solidity and tenacity of the team created with the Chairman – which included the Globalise manager, the specially appointed administrator, the company’s existing lawyer, the Belgian lawyer and the audit firm – won back the confidence of the banks and made it possible to reach an agreement, allowing the company to continue its development.