15/12/2017
12 months ago Wolf was in financial distress and suffering a barrage of hostile creditors with expensive but less than business minded lawyers leading the onslaught. Nobody gave the business a chance. How could they if they were confined to following a legal rescue process?
The formal rescue process took less than 4 months, and all creditors were paid out 100c on each ZAR of debt.
Outcomes, what does the business look like today? Revenue has quadrupled, headcount tripled, our cash conversion cycle has been reduced to less than 30 days, (with no aging debt), meaning the free cash we generate in a single month can be reused 12 times in a year. Oops, I've lost the lawyers! But the rest of you will appreciate the compound effect of this and how important it is in allowing a growing business to remain self-funding and independent, avoiding expensive external funding.
What has been the return on this investment? Which ever valuation method you think appropriate the return is tracking well over any expectation an unreasonable person might have. The secret is complementing cash with sweat equity and approaching business rescue differently.
It took us 3 days to understand the dynamics of Wolf's potential, and we took on the rescue at risk. No rescue, non pay.
We broke convention and started the remedial actions that the rescue plan would contain as we were writing the rescue plan that creditors would have to approve later. Seems obvious but it happens rarely.
Surely others have posed the same questions as these? If you are accredited as a Business Rescue Practitioner, surely your goal is to actually rescue the business instead of profiting and the expense of the business itself and its creditors? But if you are any good then instead of earning paltry fees surely you would be more credible if you had some flesh in the game? Surely a rescue practitioner's previous success will have provided them with personal resources to do more than "manage a legal process" surely their credibility provides access to investment capital or debt funding? You'd think so!
Our remedial actions saw a return to monthly profitability before the rescue plan could be formally published and voted upon. In fact we hired new staff during the "rescue planning" phase. Our rescue plan became a prospectus for post commencement funding through debt to equity refinancing and being people who wouldn't sell something unless we believed in it, we invested ourselves!
Regrets? Hardly!
Criticism? Plenty!
Hard work? Not overly, but plenty of smart work and the right work!
Solutions? It wasn't just the money! In fact if you as the rescue practitioner do not address strategy, effective operations, and instill process, structure and discipline, all the while making sure that the few key obstacles to defined success and value destroyers are dealt with, then do not expect a return on your investment. For example, we implemented ISO 9001/2015 quality management, we addressed issues of adequate and safe working conditions and facilities, we embedded focus and accountability and ruthlessly addressed issues across the operational value chain. Financing was a necessary but insufficient condition to success.
Our approach fulfills all the criteria solid citizens demand, it serves a noble purpose and we make a contribution to society, even if it is small we feel it is meaningful. We know how many jobs we have both saved and created, moreover the return on investment is significant and counter-intuitively, less risky, and finally it is great fun and hugely satisfying! Visit the Wolf Fabrication page, why not find us and come visit. You'll see our other recent rescue investment and perhaps you'll help us find future businesses that met our investment profile and need a partner? We are actively looking.
Wolf provides steel based fabrication and repair services, especially where earth moving buckets are
