Pre-pack administration of a technology business

When the Company's main investor referred the directors to us, they were facing a serious solvency crisis.   

The Company had an innovative software product that helped its customers manage complex financial contracts with their suppliers. It was a young and cutting-edge Company, but it still needed more investment to reach its full potential.   

This phase of a technology company’s lifecycle is often very challenging especially if product development progress has been slower than anticipated. These companies will often find themselves not meeting the criteria for further investment from funders.   

The Company was both cashflow and balance sheet insolvent. We explored different options to turn the situation around, but none of them were feasible.   A pre-pack administration was the obvious solution as it would allow the Company to sell its business and assets quickly and smoothly, while preserving their goodwill, IP rights and staff jobs. 

A pre-pack administration involves finding a buyer for the business and its assets before the company goes into administration, and then sealing the deal as soon as the administrator takes over. This means the business can keep operating without losing its value, reputation, and customers. 

We wanted to make sure that the creditors got the best possible outcome, so we launched an intensive marketing campaign to find potential buyers for the business and assets. We knew we had to act fast, as the Company had limited funds to keep trading while we looked for a buyer.  

Buying a business in a pre-pack administration can be a risky move, as the buyer has little time to perform due diligence. The buyer also has to deal with the challenges of turning around a struggling business and investing in its future. These factors often lower the price that the buyer is willing to pay.  

We managed to attract three offers in just 14 days, which gave us some room to negotiate. We secured a good deal for the business and assets, which was completed on 21 August 2024, soon after our appointment as administrators. 

Sandra Mundy, Joint Administrator, shared her satisfaction with the outcome of the deal. She said, "We are delighted to have worked closely with the management team to secure a sale that not only saved 17 jobs, but also provides a return for the unsecured creditors. We congratulate the Purchaser on their acquisition and wish them all the best for the future."