The positive aspects of properly planned and executed pre-pack administrations – and their ability to bring service sector businesses back from the brink while giving a decent return to stakeholders – are being highlighted by Southampton insolvency practitioner Antony Fanshawe following the successful sale of a Lymington-based specialist IT firm to an American company.
Formed in 1995, the Logos Technologies business specialises in electronic data capture systems for the pharmaceutical industry. Antony Fanshawe, regional partner with Begbies Traynor, was initially appointed to assist with negotiations between shareholders regarding the potential sale of the business.
It soon become apparent that the company was technically insolvent but, says Antony, placing it into formal administration and then marketing the business for sale would have sounded the death knell in terms of achieving the best deal for creditors.
“Once word of administration gets out it becomes virtually impossible to retain the staff and customers necessary to keep a software developer like this in business. Value disappears very fast indeed” he explains.
“In these situations you must sell quickly or not at all. The pre-pack process facilitates this by allowing terms of a sale to be negotiated prior to the company being placed in administration. The disposal can then take place virtually immediately. The trick is to get the best deal for stakeholders whilst keeping the process under wraps.”
With two potential purchasers in the frame Antony was keen to make the process as inclusive as possible and the opinions of all stakeholders were carefully considered as an important factor in the administrators’ decision-making process before the American company, Omnicomm Systems Inc was selected as the preferred bidder.
The business is now trading successfully as Omnicomm Limited, benefiting from the intellectual property and global licensing agreements of its new parent company.
Antony concludes: “Pre-packs are an excellent tool for bringing about the sale of a business where the real value lies in the employees, forward contracts or intellectual property. I hope that the experience of Logos Technologies will help the process to be seen as an important business recovery tool used properly in the right case.”
Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.
Julie is a member of the Insolvency Practitioners Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.