We were approached by a client who had a company running a variety of businesses under one umbrella.
As a conglomerate, the group was not producing sufficient profitability and business growth to continue in its present structure. After careful analysis of all the varied businesses and structures, we recommended that three of the four businesses be closed and/or sold off, and that the company and its principal's concentrate on one business to achieve both the growth and the profitability targets required. It was foreshadowed that the closure or sale of the three businesses would create some cashflow problems and that this would be further exasperated by the growth of the remaining business. Nonetheless, detailed business plans were prepared and cashflow projections undertaken to ensure that there was a road map for the future direction.
As anticipated, and after overcoming the issues in relation to closing of the businesses, repaying the creditors in full and growing the remaining business, growth has been spectacular in that it is anticipated that the business will more that triple in less than one year, and the company was also able to open an interstate office to meet demand. Consequently, profitability is anticipated to be greater than previous turnover.
This result has demonstrated that more is not always better and that companies concentrating on a core business can effect a market domination and produce results far in excess of a scattered approach where management does not focus on any of the businesses to the extent required.
As a result of the restructure and the planned going forward, de Vries Tayeh instead of fees took an equity and fees position to enable the company to overcome its cashflow.
Further, we were also placed as Chairman of the Board of the company to oversee its continued growth. As a consequence, certain of the clients of this business have made approaches to buy the business, however, the exit strategy for the owners calls for further growth before the contemplation of sale.