The company was the leading provider of cinema advertising in the UK and Ireland had revenue in excess of £70 million and employed about 200 people.
The group provided cinema advertising reels to the major cinema exhibitors and also distributed marketing collateral.
The company was a subsidiary of a major FTSE 100 communications group. The company had grown a dominant market share by entering into long term guaranteed contribution contracts with the major exhibitors. The contracts were based on historic sector revenue growth. The increasing use of internet based advertising had severely affected the cinema advertising market and the company had fallen into a significant loss-making position.
The parent company was presented with the option of either putting the subsidiary into an insolvency process that would have caused severe reputational damage or continue to trade and find either a suitable trade or private equity acquirer.
To develop a business plan that proved to the parent company management that the company could continue to trade while a suitable exit option was developed.
To then use the business plan to test the appetite of the market for a private equity sale or to organise the disposal to a trade buyer.
The parent company management were convinced that the company could trade through to a realisation point.
The company was marketed to a number of private equity purchasers and a proposition was developed for the potential purchase by a number of major exhibitors.
The trade sale route was identified as the most beneficial route for the core business and it was split form the rest of the group and sold to a joint venture vehicle formed by the two leading exhibitors.
A team of interim staff was recruited to manage the disposal process for the core and to continue to operate all the businesses until final disposal.
The reel production company was sold to a trade buyer. All the staff were transferred to the new owner using compromise agreements that avoided all potential TUPE issues.
The collateral distribution business was sold to its management.
The Irish business was sold to the local management in conjunction with an Irish media entrepreneur.
The timing of the sale of the core business meant that the parent company benefited from significant cash realisations from the release of a major new film release. The parent company also avoided the reputational damage of putting one of its high profile subsidiaries through an insolvency process.
No job losses were incurred and all the businesses in the group continued to trade as going concerns.
The core business was used as a platform to create a new digital platform for cinema advertising in the UK.
Case Study: David Ives