The Hardman & Co Monthly: November 2024
Feature article: “ROOM” (Running Out of Money) risk, How managing liquidity risk can sustain corporate value and maintain shareholder confidenceAs we come close to the end of a very challenging year for many UK entrepreneurs, as well as a frustrating period for shareholders, it is time to address one elephant in the ROOM!
ROOM stands for “Running Out of Money”. The risk of doing so, or the perception that it could occur, can destroy corporate values and prematurely paralyse a business. While this is a new description of the traditional references to liquidity management, ROOM risk accurately describes a growing and troubling problem. Details of emergency corporate fund raises regularly feature in the financial press, and the failure rate of businesses in the UK is worrying. While appreciating that companies fail for a multitude of reasons, a key factor is often the lack of cash resources.
It is worth making the distinction between cash and assets. A company may have a strong balance sheet (leaving aside the issue of the correct valuation of some assets), but it needs access to cash or very liquid assets to meet the demands of suppliers. Without cash, or money as we call it here, its business will “gum up”.
Friday Night is a development stage company engaged in the business of acquiring and exploring mineral properties with a view to developing mineable deposits of precious and base metals.
Accesso Technology Group is engaged in the development and application of ticketing, mobile and eCommerce technologies, and virtual queuing solutions for the attractions and leisure industry. Co.'s solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. Co. primarily has operations or customers in the U.K., the U.S., Canada, Italy, Germany, Australia, Brazil, and Mexico.
Apax Global Alpha is a closed-ended investment company that invests in a diversified portfolio of private equity funds and derived investments in debt and equities. As of Dec 21 2017, Co. targeted an annualized Total Net Asset Value Return across economic cycles of 12-15%, net of fees and expenses. Co.'s investment activities are managed by Apax Guernsey Managers Limited (the Investment Manager) under a discretionary investment management agreement. The Investment Manager obtains investment advice from Apax Partners LLP (Apax Partners). Apax Partners advises on investments globally in companies across four sectors: Tech & Telco, Services, Healthcare and Consumer.
H&T Group is a holding company. Through its subsidiary, Harvey & Thompson Limited, Co. is engaged in pawnbroking, gold purchasing, retail of jewellery, cheque cashing, unsecured lending and other related services.
ICG Enterprise Trust is an investment trust. Co. is a private equity investment company focused on buyouts in developed markets. Co. invests in private equity funds and also directly in private companies. As of Jan 31 2017, Co.'s total investment portfolio amounted to £594.3 million.
Shield Therapeutics is a specialty pharmaceutical company focused on the development and commercialization of late stage, hospital-focused pharmaceuticals which address areas of high unmet medical need. Co.'s key products are Feraccru®, commercially available for the treatment of Iron Deficiency Anaemia, and PT20, for the treatment of systemic phosphate accumulation (otherwise known as hyperphosphatemia). Co. has an additional pipeline of three prescription pharmaceutical assets (PT20, PT30 and PT40) with commercial synergies.
Volta Finance is a closed-ended investment company with the objective of investing, among other asset types, in the following main asset classes: Collateralized Loan Obligation, Synthetic Corporate Credit, Cash Corporate Credit and ABS. Co. has appointed AXA Investment Managers Paris S.A., as its Alternative Investment Fund Manager to manage the investments of Co.
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