Should never have happened...
When you’re saddled with a shit balance sheet and any profit you generate is swallowed up by debt and loan note interest, no amount of bright spark ideas can get you out of a hole when your business needs to change direction. Those very ideas are limited as a consequence of a lack of financial clout and often lead to the cheapest option that rarely delivers.
This is a business with gross margins of around 50% but saddled with a woeful balance sheet, the result of repeated Private Equity investment and lack of real direction.
I once sat in a meeting with non-exec Director representing PE Investors in the funding of an MBO involving a midlands based OEM. He was totally clueless of the business and had no inkling of how important the previous owners had been to it’s success. The result? a second PE investment that subsequently added to the debt and further weakened the balance sheet. When sales stutter in such instances, the writing is on the wall.
Biting the hand that feeds IT
