How Personal Guarantee Insurance Protects Managerial Buyouts

When businesses change hands, even the best looking prospects can sometimes come with risk.

A London based Professional Consultancy service, providing sales and training courses to Blue Chip and Multi National, started in 1989 and bought out by the Management Team in 2021 looked like a certain winner for years to come.

But with the Covid headwinds and competitors able to move faster into technological solutions for coaching, the business lost a significant chunk of its work.

As cash flow dwindled, a deferred payment from the buyout could not be met and they had to go into Administration.

The Administrator acted fast to preserve jobs and remaining work in the pipeline the business was sold as part of a pre-packaged sales process.

The Management team had had so much confidence in the business back in 2021 they had borrowed £725,000 for the buyout, and had personally guaranteed £145,000 with their own assets.

When it looked like failure might be coming, the team swiftly go in contact with the provider, who were able to provide a range of support.

Pre Insolvency Advice

Exploration of refinance options and repayment holiday

Introduced the client to a Panel Member firm for early intervention and limit escalation of costs

Appointed a negotiator instructed to help reduce outstanding obligations under the Personal Guarantee.

The final settlement negotiated by the experienced appointee came to £50,000, and the PG Insurance picked up £40,000 of this sum, resulting in a very relieved Management Team.

Do you have Personal Guarantees currently? Are you being required to sign them to get the funding your Business needs?

Click the link to see if Personal Guarantee Insurance can protect you


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