PKF Texas recommended a retention plan for the employees so that operations could continue as PKF Texas sold down inventory. 

Our team attempted to get operations people to do a full inventory to make sure we had the proper count on the books.

PKF Texas immediately started going through A/R and calling in all receivables and also called vendors to have them take back as much inventory as possible. One sale back amounted to $1.8MM.

We listed the building for sale with a broker.

The UK parent found a potential buyer for inventory, building and equipment. The terms were to stop selling inventory immediately; the sale would go through within three weeks.

PKF Texas advised the client to not stop selling inventory unless the buyer was willing to put of 10% of the $4MM purchase price, non-refundable. In this case, about $400,000.

The client did not take our advice. The inventory was not accurate and was off by several hundred thousand dollars. The buyer took two months to get to a potential close. The business was to close on a Friday. PKF Texas went through the process of terminating all employees. Most were to start working for the new company the following Monday. The buyer came in with a revised offer that was ½ of the purchase price. Our client killed the deal and decided to close shop and hold the inventory. 

Our team was still working for the client and was trying to collect on old A/R.

The client needed a representative in Houston to wind down and sell off inventory and assets, including the building and land where the inventory was being stored.

Previous management was attempting a management buyout (MBO) before we were hired. They had told current clients to “not pay invoices,” because they were using A/R to fund the buyout.

The steel business, along with the oil & gas industry, was down to a point of almost a standstill; the inventory was losing value daily.

Management from the UK came in to hire a replacement (PKF Texas) and to let the previous management go after the MBO failed.

The owners failed to negotiate a retention plan for the remaining employees. There was no incentive for the existing employees to stay. The first kickoff meeting was interesting to say the least. 

The previous management had spoken ill of the client's UK team, which displayed a lack of trust with the European team.