Bringing businesses back from the brink - ReSolve Group UK

Bringing businesses back from the brink

ReSolve Group UK

Bringing businesses back from the brink

In an article published in Business Travel News Europe our managing partner Mark Supperstone was interviewed about our recent work in the travel industry and shared some thoughts to help business owners in the sector.

BTN Europe: Tell us about the nature of your business. Is travel a particular area of expertise?
Mark Supperstone: ReSolve is a boutique business advisory, restructuring and investment practice that helps companies experiencing challenging circumstances review their business model and identify the best options available to them to restructure or exit the business. Travel has become an area of expertise, particularly since the onset of the pandemic. We’ve worked with several travel businesses and recently completed our fourth sale of the year. Additionally, I am also advising another three or four other businesses in the travel sector at this current time and am a regular speaker at seminars for accountants and trade associations in the sector.

BTNE: As well as assisting companies in need of shoring up, do you advise on mergers and acquisitions?
MS: Yes, absolutely. We frequently conduct M&A activity for our clients, although much of what we do is predominantly in the stressed and distressed space. We have spent many years building up an excellent database of active parties who are looking to acquire companies and we have a strong track record of saving businesses and helping them avoid an insolvency process.

BTNE: At what point in time do business owners turn to you for help? Is it a case of sooner is better?
MS: Yes, very much the sooner the better. Too often business owners approach me when their business is beyond the point of rescue. I will always do what I can to assist, however the sooner an owner makes contact, the better. There are often viable options to save a business and avoid insolvency, however, to achieve this it is imperative that we are given time to explore all possible alternatives. The main suggestion I always make to business owners is to take professional advice early. I am always happy to speak to directors of businesses, on a confidential basis, to discuss areas of concern and possible solutions.

BTNE: Talk us through some of the ‘projects’ you’ve worked on during the pandemic.
MS: We have worked with a variety of travel businesses during the pandemic, all of which have resulted in some sort of sale of the business or assets. Earlier this year we worked with a ski operator which found itself in financial difficulty purely due to the pandemic. The marketing process extracted quite a bit of interest from buyers resulting in competing bids. After a short sales process, we managed to sell the business and certain assets, enabling the company to continue trading as well as saving the jobs of a number of key staff. We have also sold the brand names and intellectual property of another tour operator this year, as well as the brands and certain assets of a family travel agency in the South East, and advised on the successful share sale of another travel agency which secured the future of the business and all employees’ jobs.

BTNE: What are the key requirements in being able to turn a business around?
MS: Every business is different but the key factor for us is time. Given time, we can formulate a plan and attempt to resolve the underlying issues. The directors of the business also need to buy into any turnaround plan and be open minded to change, allowing measures to be implemented that are in the interests of the company as a whole.

BTNE: How has the government’s financial support affected things?
MS: In terms of travel, support such as bounce back and CIBILS loans have significantly helped to save some businesses. Almost all companies in this sector which I am advising have, unsurprisingly, obtained some financial support from the government. Without the government’s support, the number of travel-related businesses entering some form of insolvency would have increased tenfold, so the support has no doubt had a positive impact in the short term.

BTNE: Has it simply delayed the inevitable for some companies?
MS: For many, yes, I believe it will have delayed the inevitable – that is the closing of operations – as there has been a changing of the landscape of both business and leisure travel. On the other hand, however, it has given some companies the opportunity to keep their heads above water and see out this rough patch and give them a fighting chance. It is important that these businesses use the funding wisely and prepare budgets and cash-flow forecasts to ensure they can afford to repay the lending.

BTNE: Do you expect insolvencies to accelerate as support is withdrawn?
MS: Yes absolutely, but no one knows whether it will have an immediate impact or whether it will take a while to reach fruition. Either way, it will almost certainly happen. There are a number of important factors impacting businesses at the moment, not just the withdrawal of government support. We have supply chain issues, rising energy prices and a potential increase in interest rates, so there could be a difficult period approaching, particularly for those companies that are already finding things tough. If a company thinks it will become a statistic and can see issues on the horizon then I would recommend they take advice early. Additionally, there is no harm in business owners having open and frank conversations with their creditors so that all parties can work together to help its chances of survival.

BTNE: We’ve seen a lot of smaller TMCs sadly cease trading during the pandemic. What makes them more susceptible?
MS: Smaller companies have fewer resources, which means they have fewer options when dealing with financial distress. For example, for many smaller TMCs, marketing budgets are small and therefore promoting themselves to consumers, whether online or otherwise can be very challenging. Essentially, without the resources available to market themselves sufficiently they are always going to struggle to raise awareness against the larger players, which likely have more cash resources and are therefore able to sustain longer periods of negative trading. Borrowing will also be much easier for larger businesses as well, as they will have significantly more collateral to borrow against.

BTNE: In some cases, their brand names have been bought by rivals or re-purchased by owners. What’s the strategy there?
MS: The rationale for competitors to purchase brand names is essentially to increase their market share within that specific area. This generally happens once a company has, or is about to enter an insolvency process, meaning that they will be purchasing the brand under better terms than they would have under normal circumstances.Recently with so much uncertainty, some owners have taken the stance of buying back a businesses’ assets with the view of mothballing the business for a period of time and thereby keeping overheads at a minimum while the market is quiet. As international travel starts returning, the owners will slowly begin reopening the business to start generating capital again.

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