Corporate Finance

The Company originally commenced in 2009 and was formed initially to provide acquisition opportunities for UK private equity houses. Throughout, the company traded from a small office suite in Southampton, occupied under a short-term licence.

The director had previous experience in this sector and having recognised an opportunity and with the support of his contacts formed the Company as a vehicle through which to trade.

On the back of some early successes, the decision was taken to move into corporate finance whereby advice and introductions were given to directors and participators of SME’s looking to raise finance or sell their businesses.

As is typical within this sector, the Company’s income was reliant upon the successful conclusion of a transaction and as a result, cash-flow was sporadic from the outset.

The director’s father-in-law agreed to invest £100,000 into the Company, conditional upon the appointment of one of his associates, as a director and the transfer of 24.5% of the authorised share capital to him.  Having been unable to negotiate any funding from the Company’s bankers this loan was crucial to meet the working capital requirement.

Thereafter, the Company traded moderately successfully until an irreconcilable dispute between the two directors led to the resignation of the other director.  Unable to fully repay the investment at that time, it was agreed that the director, who resigned would retain two private equity contracts, which were in progress, the trading name and a cash settlement of circa £40,000 in full and final settlement.  In return, his shares were transferred back to the director and his two brothers, who had also been shareholders from the outset.

The company changed its name and thereafter, every effort was made to rebuild the Company’s profile and with several new opportunities, able to pay a commitment fee, the director was confident that the Company could return to profitability.

Regrettably, in mid-2014, one of the parties on a project which the Company had been working on for several months and which would have yielded a fee of circa £70,000 withdrew at the final stage.

Shortly thereafter, the director discovered that one of the shareholders, who had managed the Company’s finances, had failed to inform him as to the extent of the Company’s outstanding liabilities circa £160,000.  At the year-end, the Company’s turnover was in the region of £25,000 with a loss of £180,000.

With no new work in prospect, it was concluded that ongoing trading was untenable and having considered the company’s option AABRS concluded that it was best for the company to be placed into creditors voluntary liquidation.

Should you have any further enquires in relation to this case study please contact Simon Renshaw on 0208 444 3400 or email