A firm of property consultants and agents with eight offices across London and employing approximately 250 staff provided a broad range of residential and commercial property consultancy services, including letting, valuations and property management. The Company had a strong overseas arm with particular focus on high value property sales and management in the Middle East.
The Company had seen significant downturn in trading activity as a result of poor market condition in the UK property sector and, in particular, to the central London residential market, to which the company had a significant exposure. The Company had incurred losses of £2.7m over an 11-month period and had a significant funding requirement in respect of future taxation liabilities.
As a result of its poor financial position, the Company was struggling to attract new staff which, in turn, hampered their efforts to attract new revenue streams.
The business also had a significant pension deficit of over £100m which was increasing year on year due to onerous investment parameters for the scheme. This meant that a significant proportion of the fund had to be invested in gilts, which had shown diminishing returns. At the same time, the scheme provided for an annual 5% increase in payments to pensioners.
Despite lengthy negotiations between the Company, its then advisors and the Pensions Regulator, no agreement had been reached for the restructure of the pension deficit.
Significant management time was being expended seeking resolution to the pension deficit position, taking away management focus from day-to-day trading operations.
As the business was a ‘people business’ where much of the inherent value sat with the partner group, it was vital to manage the partner group throughout the sale process to ensure that no disintegration of the group took place. Our work was carried out against a backdrop of competitor companies attempting to recruit key members of the Company’s partner group, either individually or in silos.
In order to minimise publicity around the marketing campaign and, therefore, minimise the risk of competitors seeking to recruit key staff members, BTG drew up a list of potential purchasers of private equity firms and competitors – each being given access to a secure data room after entering into a suitable non-disclosure agreement.
Throughout this period, BTG liaised closely with the Pensions Regulator, the PPF and the pension trustees to ensure that any sale was in the best interest of the pension scheme, which was anticipated to be by far the largest creditor in the administration.
Following a period of marketing and subsequent complex negotiations, a sale of substantially all of the Company’s business and assets was completed.
The business and assets of the Company was sold by way of a pre-pack administration sale to a new private equity investor.
The sale protected in excess of 400 jobs, allowed the smooth transfer of client files and in excess of 1000 client bank accounts to the purchaser and provided a material return to unsecured creditors.
As part of the process, the company exited numerous onerous facilities management contracts which were carried out overseas and which generated losses for the company.
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