Selling a Non-Performing Division

IT Services Company

The Challenge

Our client, as a result of external factors, had a non-performing division losing so much money on a weekly basis that it was threatening the viability of the entire company.

Torc Response

By effective leadership an internal team and our turnaround specialist engineered a sale of the Division to its main competitor. The sale involved paying the competitor enough to take on the commitments to the employees (TUPE Regulations), the equipment (non-cash) and negative goodwill.

Our turnaround specialist and the team renegotiated the bank debt and lease agreements to facilitate the sale. They also closed depots and re-engineered the business to be able to effectively operate at a scale of operation halved by the sale.

The key ingredient was experience and a refocusing of the management team into 2 distinct groups to take on 2 distinct mandates: one team dealing with the sale and the second team dealing with the ongoing business.

The team dealing with the ongoing business had to reduce numbers and change operating practices to be become profitable in a smaller business.

Results Achieved

The company’s profitability was restored to good health and its capital and interest repayments were put on a firm footing. The management team became more proactive in facing difficult issues and in dealing with the ongoing challenges of the business.