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The Recovery Market Who, What, Where Carl Jackson

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Tenon is rated 9th in size in the UK ... Tenon is the fastest growing practice as shown in the Accountancy ... National coverage from 30 of Tenon's 49 offices ... – PowerPoint PPT presentation

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Title: The Recovery Market Who, What, Where Carl Jackson


1
The Recovery MarketWho, What, Where?Carl
Jackson
2
Carl Jackson
  • Tenon Group Board Director
  • National Head of Tenon Recovery
  • Tel 07800 617224
  • Email carl.jackson_at_tenongroup.com
  • Qualified ACA and JIEB
  • 20 years Recovery experience
  • Specialisms include Retail, Leisure, Agriculture
    and Aviation

3
Who are Tenon?
  • Tenon is an AIM listed full service Top 10
    accounting practice primarily servicing the owner
    managed business sector - Advisers to
    Entrepreneurs
  • Tenon is rated 9th in size in the UK
  • Complete portfolio of services including
    recovery, tax, audit, accounts, corporate
    finance, outsourcing, VAT and financial services
  • National coverage with 1,800 employees in 49
    offices, servicing in excess of 10,000 clients
  • Tenon is the fastest growing practice as shown in
    the Accountancy Age Top 50 Survey 2009
  • Turnover grown from 80m in 2004 to 160m for
    year ended 30 June 2008
  • Operating profits grown from 9m in 2004 to 18m
    for the year ended 30 June 2008
  • Ambition to double over next 2/3 years

4
Tenons Journey
  • But it wasnt always like that
  • Formed as a plc 2000
  • 16 Acquisitions 2000/2001
  • Integration and management problems
  • Goodwill write down, losses, high debt levels
  • Management change
  • Turnaround
  • Return to acquisition trail in 2006
  • but now targeted
  • Cash generative
  • Very focused
  • Local autonomy
  • Clear strategy
  • Clear marketplace

5
Who are Tenon Recovery?
  • Tenon Recovery
  • Presently the 2nd highest corporate appointment
    taking firm in the UK
  • Presently the highest bankruptcy appointment
    taking firm in the UK
  • Tenon Recovery is 26 of Tenons business and
    growing
  • National coverage from 30 of Tenons 49 offices
  • 39 directors and in excess of 400 staff,
    supported by a dedicated technical and compliance
    team to enhance the quality of our service
  • Turnover growth from 15m in 2004 to 40m
    forecast for year ended 30 June 2009

6
Corporate appointments 1 January to 12 June
2009
7
The Current Climate
  • The UK is in recession the worst on record
  • Liquidations increased by 52 during the year
    2008
  • Personal insolvencies increased by 19 during the
    year 2008
  • Predicted to continue for 3/4 years
  • When economy recovers history
  • demonstrates insolvencies continue
  • to remain high

8
To put things in perspective ..
  • By the end of my presentation, the following will
    have happened in the UK
  • 5 people will have been declared bankrupt or
    insolvent
  • Almost 5 properties will have been repossessed
  • By the end of today, the following will have
    happened in the UK
  • 331 people will be declared bankrupt
  • 3,178 people will have been made redundant
  • 182m of interest will have been paid
  • 103m of interest will be paid by the government
    on national debt
  • Source Credit Action June 2009

9
The Market facts and figures
  • 1m people are currently subject to a formal or
  • informal personal insolvency process (R3 May
    2009)
  • Two thirds of those with major financial problems
    are not seeking advice (Yougov February 2009)
  • Lending levels to businesses at their lowest
    since June 2000
  • (Bank of England, Trends in Lending, June 2009)
  • Mortgage lending at its lowest level since
    December 2000
  • (Bank of England, Trends in Lending, June 2009)
  • HMRC Business Payment Support introduced in
    November 2008 has granted extended payments of
    2.6bn
  • Cost of borrowing rising sharply, many lenders
    using a LIBOR base

10
The Market how we prepared
  • IBR Team to deal with increase in advisory
  • assignments
  • Lender Services Team to develop relationships
    with Banks
  • Tenon Finder brokerage designed to enhance
    relationships with lenders
  • Turnaround fund to assist with funding for
    troubled businesses
  • Tenon Accelerated hybrid product of Recovery
    and Corporate Finance

11
Hot Topics Pre - Packs
  • What is a pre pack?
  • The sale of a business and/or assets immediately
    after the appointment of an administrator
  • Negotiations take place prior to administration
    to avoid the costs of trading whilst searching
    for a buyer
  • Are they a new concept?
  • No but volumes have increased since the
    Enterprise Act 2002
  • Topic raised following high profile retail
    pre-packs such as Whittard, US and the Officers
    Club

12
Hot Topics Pre - Packs
  • Why are pre-packs criticised?
  • The business is usually sold with little or no
    open marketing
  • Unsecured creditors are usually not informed
    pre-sale
  • What are the benefits?
  • More jobs are saved in 92 of pre-packs ALL
    jobs were saved compared to 65 in a business
    sale
  • Continued trade preserves future income for
    suppliers
  • The return to secured creditors is higher on
    average, secured creditors recover 42 of their
    debt through a pre-pack compared to 28 in a
    business sale

13
Hot Topics Pre - Packs
  • How are creditors protected from any questionable
    activity?
  • Statement of Insolvency Practice 16 (SIP 16)
    issued 1 Jan 09
  • IPs must keep a detailed record of the reasons
    for pre-pack
  • Creditors should be informed of the details
    relating to the pre-pack sale when first notified
    of the administrators appointment
  • IPs must ensure they only advise directors on
    the companys position not the directors
    personal position

14
Hot Topics Pre - Packs
  • Our view
  • Pre-packs, when used in the correct way, often
    provide the best outcome for creditors
  • Whilst unsecured creditors may suffer a bad
    debt, they should benefit from future trade as a
    result of business preservation
  • The chances of job preservation are higher
  • Whilst the financial markets remain restricted,
    there are minimal funding opportunities and
    directors are left with limited options

15
Hot Topics Government CVA Consultation
  • What is a CVA?
  • A formal arrangement with unsecured creditors for
    repayment of debt, usually from profits achieved
    through continued trading
  • It is a rescue procedure that preserves the
    company in its current form
  • How often is the CVA procedure used?
  • JJB Sports is the first retail Plc to enter into
    CVA
  • Circa 500-600 CVAs are approved each year
    compared to 5,200 administrations and 17,000
    liquidations

16
Hot Topics Government CVA Consultation
  • Why are CVAs less popular than other procedures?
  • Companies are unable to fund cashflow for
    continued trade
  • Directors have left it too late to seek advice
    and creditors are unwilling to support
  • What is the government seeking to achieve?
  • Offering super priority funding for cashflow
    purposes to companies in CVA or Administration to
    rescue the company
  • Similar to what is offered in the US
  • Extension of the CVA moratorium to medium and
    large sized companies

17
Hot Topics Government CVA Consultation
  • Our view
  • If implemented correctly, this could be a good
    alternative to administration or liquidation
  • The number of formal insolvencies could
    dramatically reduce
  • The role of the interim manager could become more
    crucial
  • It may not be acceptable to secured creditors if
    government funding take priority to their lending
  • Unsecured creditors may have concerns if they are
    pushed further down the chain

18
Opportunities
  • Proven turnaround experience is at a
  • premium
  • Pro-active approach by secured lenders
  • is generating advisory/IM opportunities
  • Directors are willing to use IMs to plug
  • skill gaps to save their business
  • Increased demand by private equity
  • houses for distressed acquisitions
  • MBI opportunities limited in current market

19
How we can work together
  • We can involve you in any turnaround cases where
    interim management is appropriate
  • We can use our banking contacts to refer
    opportunities to you
  • We can act as a sounding board when you are
    considering solutions for your clients
  • We can offer initial, free advice to your clients
    if a Recovery or Insolvency process is possible
    or to benchmark against the turnaround outcome

20
Final thought ..
  • The press are talking about a looming Credit
    Crunch Baby Boom being caused by the recession
  • What impact will this have long term on us?
  • More businesses,
  • more problems,
  • more work ..!

21
Questions

22
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