It's a kind of magic

As every entrepreneur knows, growing a company is fraught with perils. Your business model, for instance, might have worked well up to a certain stage of development, but may prove woefully unsuitable at the next one. Key customers or suppliers may let you down. Rising interest rates and falling asset values may put you in a squeeze, or a transient period of booming business may have encouraged you to overextend your business.

If something like this happens and your company is plunging into the red, do not despair. Provided you spot the warning signs in time and take appropriate action and advice, you stand a good chance of turning it round, even though it can be painful.
In most cases, companies that have successfully surmounted such crises have done it either with the help of new management or outside specialists, or both.

Three years ago, holiday company MyTravel Group was staring potential collapse in the face. Bill Dawson, recovery partner at professional services firm Deloitte, was called in to see what could be saved. He set to work with the help of fellow accountant John Darlington, who had previously steered the recovery of cider group Bulmers, and is now leading the equivalent department at another Big Four firm, KPMG.

Today MyTravel is one of the country’s leading package holiday providers. It sports a market value of £882 million and chief executive Peter McHugh says that this year he expects the company to turn a £17.5 million loss into a pre-tax profit of between £40 and £45 million.

In 2005, TV producer Peter Urie, who sold his Media Merchants children’s TV group for £14 million in order to retire at 48 and learn to fly, was induced to return to the fray.
He agreed to become managing director of overstretched film production group Metrodome, which was losing money and groaning under £3.5 million of debt. Urie has now turned it back to profitability, organised a £1 million private share placing and persuaded a key creditor to convert a £1 million loan into shares. He plans to raise more funds from City institutions in the New Year.

Geoffrey Defries, an accountant of 30 years’ standing and more recently a specialist in turning around companies with long-term prospects but near-term problems, has joined forces with Turnaround Capital, a company set up to back such companies and help them on the road to recovery and perhaps flotation. Steered by wheeler-dealer Renwick Haddow of Arc Fund Management, Turnaround Capital has administered its medicine to a variety of companies, including a debt collection agency hit by the loss of a major customer, and a lottery operator starved of capital and pursued for allegedly unpaid VAT.

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