Summary
With growing market uncertainty, and rising wage and supply chain/tariff costs, many struggling businesses now face insolvency or liquidation.
If your business is struggling with cash-flow, or can’t meet its financial obligations, it may be time to recognise the financial runway is shortening and seek professional support.
Your company may not have sufficient time or money to engage an Investment Bank to run an M&A process. In this case, seeking advice instead from a Restructuring Advisor/Insolvency Practitioner can help you explore multiple options.
They help you:
- Understand your legal and director responsibilities in worst-case scenarios.
- Explore alternatives like accelerated M&A, IP or asset sales, or insolvency processes.
Study
Consider the case of an early-stage technology company that had developed a breakthrough, patent-backed AdTech solution for use in sports & entertainment. The technology was the result of ten years of R&D and IP was the main business asset. Examples of this IP included software, patents, key organisational knowledge, trade secrets, critical databases, and brand assets. Despite strong trial results with global partners, the business had limited revenue and continued losses due to ongoing R&D.
The company engaged a Restructuring Advisor who recognised that the IP was the critical asset in this business. Before developing a strategy, they wanted to understand how the value of this IP portfolio would be impacted by different financial distress and insolvency scenarios. The technology was complex, and a buyer would likely need significant handover from management to be able to commercialise it.
Outcome
The advisor moved quickly with an accelerated M&A sale. Delays in the process would have likely resulted in insolvency and consequently a drastic drop in the value of the IP assets. The necessary handover required by key personnel created a significant gap between the going concern and the bankruptcy & insolvency value of the IP. Whilst registered intellectual property could be easily transferred in insolvency, other critical IP required a handover by management.
A private equity buyer stepped in, retaining the core team under a new ownership and funding model. The business was saved, and asset value preserved.
This case highlights the importance of understanding the key drivers of IP value and how these can be preserved in financial distress. Advance planning and swift action can protect value and influence restructuring or insolvency strategies and timelines.
