Private equity owners of a network integrator with an operating footprint in UK and Eire decided to implement a strategy to move it from a ‘transactional’ retailer of voice, data and related systems solutions, to a services business, maintaining ongoing relationships, understanding the needs of its customer base and securing annuity revenues from loyal customers. A management team from Blue Chip technology businesses was recruited to implement strategy, however they conceived and executed a poor plan intended to deliver these sensible strategic goals. When a bones plan associated with the strategy was presented to sales teams, key salesmen concluded that they would not earn money in line with previous years or their capabilities, and most left the business. This had an instant impact on sales, a slightly delayed impact on cash flow, both worsened by prevailing market conditions. Worse, the downturn in performance meant that a key technology partner with which the business had an exclusive distribution arrangement was under threat.
The management team was replaced. A key lender wanted an opinion on new management’s recovery plan – essentially that reversion to the old business model and recruiting new and former sales people would generate a quick impact, enabling the business to sell its way out of trouble.
David, leveraging his commercial experience in telecom and network integration, reviewed and challenged management plans, probing key assumptions and progress on actions taken so far. He identified key issues and risks for the lender to consider and provided a view on the riskiness of the recovery plan. The business was refinanced.