The interim manager was hired by the shareholders of a family-run cosmetics company with two business divisions. it generated 60 percent of its turnover with the brand of a drugstore chain. The company generated the remaining 40 percent with products from a brand it had built up itself. The EBITDA of the company as a whole was heavily negative (up to minus 20 percent). Investigations by a renowned auditing firm had revealed that the products of the drugstore chain were profitable, while the products of the company's own brand were generating high losses.
The shareholders had already initiated a sales process and found a buyer for the drugstore business. The buyer was active in a neighboring market segment. However, he rejected the overall takeover and demanded that the "Own Brand" division be handled by the seller.
Project management for the handling of the "Own Brand" division
The interim manager was tasked with handling the Own Brand division at the lowest possible cost. The following ancillary conditions had to be observed:
- The company will be taken over by the seller as a whole (share deal). The closing costs will be invoiced to the seller as incurred.
- The own brand was mainly distributed via three large retail chains. Customers were not to be informed in order to avoid immediate discontinuation. In the event of an immediate discontinuation, high volumes of returns were to be expected, which would have led to correspondingly high write-downs.
- The buyer wanted to take on specific staff in order to integrate them into its organization. A social plan and notification of mass redundancies were therefore not on the table.
Detailed project plan developed for winding up and takeover
First, the interim manager comprehensively reviewed the customer and employment contracts as well as all other relevant contracts. Once he had determined the company's obligations, the wind-up conditions and costs had to be estimated. He then drew up a detailed project plan in which the wind-up and takeover activities were coordinated.
Management buy-out enables significant reduction in closure costs
Parallel to this, the interim manager held talks with the company's authorized signatory about a management buy-out (MBO). After a few days of deliberation, the authorized signatory announced that he wanted to take over the Own Brand division under certain conditions. Further discussions about the MBO were then held directly between the buyer and the authorized signatory.
The MBO significantly reduced the number of employees to be made redundant. The interim manager took over the severance management for these employees in collaboration with an employment lawyer known to the company. The costs for employee severance payments were significantly below the calculated value. There were no additional closure costs.
