Opus rescues Valeside Catering after its failed acquisition
November 29, 2022
Successful catering business with health revenue
Valeside Catering Contracts Limited, a business incorporated in 2002 had been a successful husband and wife catering company, servicing a number of hospices, golf clubs and other corporate clients across the home counties and south east. Post pandemic, the 2021 accounts reported a healthy revenue of £1.4m, pre-tax profit of £97k and a balance sheet with net assets of £123k, including £62k in cash. For the owners of Valeside Catering Contracts, Gary & Shirley Crimmin now seemed the ideal time to consider retiring and look at options to sell the business.
Having engaged with a number of interested parties, they decided to pursue a partial exit strategy that enabled them to take some cash off the table whilst retaining some modest equity and agreeing an element of deferred consideration.
Gary Crimmin commented, ‘For Shirley and me, it was important we achieved the best value for the company, having devoted the last 20 years in building a successful business. The deal reflected our valuation and we were happy to compromise on the structure, it felt like a win-win for both parties as we’d also been asked to stay on as employees’.
Sale of Valeside Catering and new business owner
In early May 2022, the Crimmins sold the Company and reverted to solely focusing on day-to-day client service delivery, while the financial management of the business was moved by the new owner to the total control of a Sheffield-based individual, who styled himself as CFO although he had not been appointed a director.
Invoice discounting and a small loan had been provided by Ultimate Finance to support on-going trading of the business. However the working capital generated from the facility was used to finance the initial purchase consideration rather than fund cashflow.
With the new owner unable to introduce any further funding the company faced an immediate cash flow crisis which resulted in a breach of the facility and left Ultimate Finance with no alternative option other than to issue a formal demand for repayment of the facility.
Cash flow crisis
By mid-July 2022, the Company was in crisis, without the cash resources to fund ongoing trading or pay its creditors. Suppliers had become concerned that their bills were going unpaid and well beyond terms and were threatening to put any further orders on stop, indeed one major supplier had already suspended the Company’s credit facility. There were no funds to meet the staff payroll at the end of July.
Gary Crimmin explained, ‘In less than three months the business was on its knees, neither Shirley nor I could comprehend how a profitable and cash positive business could end up this way. We had no idea that the new owners hadn’t introduced any cash to purchase the business. We became aware of the severity of the situation with the business at risk of imminent collapse. We were distraught, our immediate concern was for our staff, suppliers and customers, many of them had become friends over the years – we’d never let anyone down.’
The business was now in danger of not fulfilling its obligations to its customers, which included hospices that provide critical end-of-life care.
Opus is appointed
Joint Administrator for Opus, Colin Wilson said, ‘To protect its position and preserve the business and jobs, Ultimate Finance exercised its rights and appointed myself and Gareth Wilcox as Joint Administrators on 2 August 2022 to take control of the Company and its affairs. As the Administrators, we sold the business and assets of the Company back to its previous owners. Prompt action by Ultimate Finance in the face of unacceptable misuse of its facility has enabled Opus to save this business and the jobs it supports and avoid an entirely unnecessary financial disaster, that could have left clients, including hospices, without the catering services upon which they rely.’
Gary and Shirley Crimmin said, “With the business going into Administration, we had a decision to make. We simply couldn’t allow the business we’d built over 20 years to go up in smoke, the wider implications were just incomprehensible for us both. The last few months have been a steep learning curve and with hindsight we should have better understood the credentials and financial resources of the purchaser. Shirley and I are now committed to re-establishing our business and are thankful to the unwavering support of our customers, suppliers and staff in the circumstances”