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Turn your company into a highly profitable group

The CMR Catalyst Group Programme can achieve remarkable results for small to medium-sized businesses - often in circumstances that could be described as 'challenging'.  It works by taking the strengths of each component business and combining in a way that allows profitability to be generated at a much higher and sustained level than would otherwise have been possible.

Explanation of the concepts involved:

The Problems of a Recession:  A recession usually means that the majority of companies will experience a reduction in sales and therefore gross profit, often accompanied by a restriction in borrowing capacity both from banks and creditors.  The first stage of reaction by most companies is to cut costs including employees, to tighten credit control, and to defer capital expenditure.  If the recession continues, a point is reached beyond which further cuts are either impossible or will seriously damage the business.  Unless the shareholders are prepared to input more capital to cover losses, the only alternatives available are to either attempt to sell the company (but now from a point of weakness) or to go into administration/ liquidation or receivership.

Survival, Profitability and Growth:  But there is another way forward that not only preserves the value of the business for its shareholders but also makes it far more profitable almost immediately, and puts the business in a good shape to take full advantage of the upturn when the recession finishes.  The same beneficial effects also apply to companies that are not affected by the recession - there are major advantages of combining with others.  

Combining Sales & Gross Profits:  If you take a number of companies operating in the same general market area, perhaps from different product or service angles, and combine them together - you get a group which collectively has stronger sales and gross profit generation capabilities.  If you then arrange that combining action to increase group sales by cross-referencing customers and offering a wider product base with more marketing strength', together with a reduction in the fixed overhead costs of operating the combined business, much of the gross profit will fall to the bottom line as greatly increased net profits and cash generation.  If you now add very experienced management support that would not normally be available to the companies individually, you have a group that is not only making good net profits from the outset, but is now able to grow strongly into the future even if market conditions are not favourable.  

Combining Management:  The Programme takes each component company and handles each according to their circumstances - so for example if one company is near to insolvency it will be handled through an insolvency procedure.  Those that are not will continue as they are.  The owners/directors of each component company will be part of the management board of the combined group, and over a period of time may decide to exchange their shareholding in the individual companies for shares in the combined group.  In this way they achieve ownership of a much larger, more thrusting and greatly more profitable group.  There will usually be an external Chairman appointed with the gravitas to command the respect of all those involved, and if there is a need for further management support, that will be provided - the end result is a cohesively managed group that is able to perform in a much broader and positive way than any of the individual component companies could have by themselves.

Reducing Risk & Facilitating Growth:   Apart from the obvious trading and financial advantages of such a combined group, there are other significant advantages for the owners involved.  Firstly they will be moving from being a relatively small company to being part of a much larger, more profitable and stable organisation, with all the benefits that brings.  It also reduces the risks involved.  Secondly the process makes it easier for an owner to eventually exit or retire from the business - any problems of succession planning are solved.  Thirdly, and quite importantly, the owner-directors are no longer having to manage their business alone - they now have the colleagues and expert management resources to make the whole process much easier and more productive.  Resources, including financial capital will also be easier to obtain.  A prospect for the shareholders to eventually consider could be the flotation or sale of the whole group, which would fully realise the enhanced value of all shareholdings.

 Major Upside with Zero Risk

No Commitment until Sure:   No company joining the Group is locked-in during Stage 1 - they can decide to leave the Group at anytime.  All Group members retain 100% control and ownership of their companies until they (and only they) decide to go for full integration in Stage 2.

Stage 1:  In this stage the owners/directors of the member companies will be appointed to the Group 'Board' with an independent Chairman who will coordinate cooperation and drive forward the actions for increasing sales and profitability.  As each member retains full control and ownership of their own business, the Group Board's role is advisory only, and any actions require the agreement of all parties.  The sales and profit improvements will be achieved by:

Group-wide sales & marketing action using the Group logo & resources

Providing a fully comprehensive product & service capability

Cross-referencing customers (with internal commission arrangements)

Reviewing purchasing to achieve Group-wide cost savings

Reviewing other cost and utilisation efficiencies for lower costs

Cost reduction from sharing production and administration facilities

Stage 2:   Up until now, each Group member has retained complete control of their business - and may continue to do so if they wish (there is no coercion to move to Stage 2).  However, some members may (at their sole discretion) decide with other members to more fully integrate their businesses - by doing that they will be able to maximise the sales and profit improvement potential.  Members going to Stage 2 will exchange their shares for Group shares on an equal value basis - at that point their focus moves to maximising overall Group results, rather than just their own original company.


Why called a Catalyst Group?

CMR acts as the Catalyst:  The combination of companies in this way will usually not happen by itself - it takes a 'catalyst' to bring the group together.  That catalyst is CMR - we start the process by being in touch with companies where we consider it could be very beneficial for them to be part of a larger group.  These approaches are of course on a highly confidential basis and are handled on an entirely bespoke basis with each party contacted - there is no rigid format for the discussions.

Importance of the Chairman:  Of course, the decisions taken to join or not will be entirely taken by the owners of each business and will obviously be influenced by how they see the group benefiting them.  The choice of Chairman and CEO will be very important and that person will combine respect from all the parties involved and give confidence that the combined group will be both stable and successful.

Download CMR Catalyst Group Brochure

Read Case Study

The next steps ........

Please make contact to discuss further:  If you are interested in discussing this concept for your own business - please make contact by email (cmr@cmruk.com), letter or phone. 

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