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back to article Integrator-reseller 2e2 'broke banking covenant', hits credit buffers

The future of integrator-cum-reseller 2e2 is unclear amid claims from sources close to the firm that it broke a banking covenant in December and is running up to its credit limits in distribution. The Berkshire-based business has been a cause for concern among many wholesalers and vendors due to its massive debt and has reported …

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Meh

They ate Morse?

Looks like they're dying of food poisoning then. I'm not sure how the reseller could be "broken up and sold" unless they mean split off from the main group and sold, but which other reseller has the cash to buy in the current market?

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Anonymous Coward

Re: They ate Morse?

Ailing resellers don't get bought. Their customers can be picked up for nothing when they go out of business.

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Boffin

Re: They ate Morse?

".....Their customers can be picked up for nothing when they go out of business." I assume the 2e2 CRM system, along with all the details of all the deals that have made when and which kit is coming up for refresh, might be of value to another reseller.

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Holmes

One of the sector's big'Zombies' alas...

A common feature in many large enterprises that have become large as a consequence of acquisitions is generally an onerous bundle of debt further up the ownership chain and pretty hurtful interest rates; this despite the fact the Bank of England rate has remained static and low for some years. That debt is generally secured and will always demand certain financial ratios (covenants) are routinely met.

You might just get away with things for a while if you make a positive operating profit despite onerous interest pushing you into losses; should you make minute profit or move into operating losses before interest kicks in, then you're in a bit of a muddy hole. Credit Insurance cover on 2E2, given the balance sheet position has been limited or indeed declined by some Insurers for soem years now. One way out is to re-work debt repayment arrangements, cut out cost, change management, seek some concession on accrued loan note interests, re-structure, increase the bottom line and maybe sell the business - none is an easy task in the current climate

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Anonymous Coward

Entrepreneur P0rn

Yet again the sad story of a company finding challenging long term effects of inorganic growth. By comparison, old style business, i.e. excellence in a market niche, pursuing organic growth, creating wisdom with well paid, motivated staff, building a cash pile for bad times, investing in R&D, throwing innovative products on the market every quarter or so is so sexy it's almost entrepreneur p0rn.

Aw well, back to reality with 3-dimensional-matrix organizations, quarter end change freezes, outsourcing contract renegotiations, service level delivery actual to service level contracted delta....it's bliss....

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Oh No!

We've run out of other people's money!

If we crunched the credit, we might be left with only businesses which run at a profit.

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Anonymous Coward

2e2

The problem here is 2E2 have spent the last couple of years outsourcing support that should have been kept in the UK. Laying off highly qualified and extremely competent support staff and have been losing customers as a result. Good riddance to bad rubbish. I, for one am much better off out of there.

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