Case Study 2
18 Group Telecom
Background
18 Group Telecom is a UK telecommunications business with multiple "First to Market" technologies. Utilising emerging broadband technology and open-source virtualisation software, they were able to offer fully software-based telephone systems at half the price of traditional platforms. They could also deploy fully managed high-speed data networks and Internet connectivity both nationally and internationally at unbeatable prices because they utilised the new technology to drive down their operating costs. They were also first to market with unlimited free UK calls to landlines and mobiles. The platform was so innovative, that its features and benefits were resold by other Telecom companies throughout the UK and the United States.
Challenges
It was clear from the outset that 18 Group was a highly innovative technology company, with huge growth potential. Our initial NBC analysis established that having completed multiple acquisitions between 2015 and 2019, two of which we advised on, the Company needed to go through a financial consolidation and restructure. The main focus needed to be on reduction of “churn” as this was disrupting cashflow and creating a stressful Customer Service environment . It was also placing substantial pressure on sales teams who were spending too much time on client retention, and not enough on developing new business.
The Company needed to streamline its processes, improve its Customer Service both in terms of interaction and direct delivery of customer requirements (e.g. new orders and maintenance works), and reduce the substantial administrative burden of running multiple limited companies. There was also a fracture in the senior management team which needed to be restructured if the business was going to survive and thrive as it should do.
Solution
NBC was able to provide the necessary financial and commercial plan, as well as the Human Resource model, to establish the most profitable and sustainable business outcome. Partnering with its specialist supplier Global Eloquence, a Staff Development program was initiated which received a fantastic response.
A new revised senior management team and Board were created which gelled cohesively and funded a Management Buy Out (MBO), headed up by Lucie Clarke, the newly appointed Managing Director.
Clients happily migrated their accounts into the new, debt-free Group company which was quickly accredited with independent regulated Quality Assurance to ISO 9001 and ISO 27001.
Infrastructure investment was made available and substantial network upgrades ensured clients received peak performance which exceeded their Service Level Agreements.
Outcome
Customer churn subsided, with many entering new 36 month contracts compared to the industry standard 12 month term, due to incentives devised by NBC. Cashflow stabilised and revenues and profits steadily increased.
In line with the 36 month MBO plan initiated in February of 2019, NBC utilised another of its partners to take the business to market, and in December of 2021 Heads of Terms were signed.
The sale completed in April of 2022 under the watchful guidance of NBC with the transfer of all issued share capital to the new owners, in return for a substantial seven figure sum.
The business continues to trade at a steady profit under the stewardship of the new owners and remains a client of NBC.
Lucie Clarke, Managing Director, 18 Group:
"Leading a Management Buy Out was not something I had done before so I was naturally cautious. After six months of consulting with NBC we had explored all of our restructure options, and this was the lowest risk outcome with the greatest benefit to clients, suppliers and our brilliant team. No sooner had we completed the MBO when COVID struck, and here again NBC navigated us through troubled waters with some brilliant crisis management. Sticking to the plan, we finally sold the restructured business as a going concern 18 months later, with the original shareholders; once on the brink of losing everything; making life-changing amounts of money".