Mercury to help out troubled operators

Mercury Inns, the Tamworth-based pub management group, has launched a new consultancy operation, Mercury Liquid, which it says is designed to help businesses out of administration.

The group, which for years has managed and operated a number of pubs and hotels throughout the Midlands and the North West, has launched the division in order to work with lenders who are left with businesses that are in trouble financially.

But the group's management stresses there is more to the service than merely identifying why a business has gone wrong, as co-managing director Kevin Thornton explained.

"We use our experience and trade the business until it can be sold. We look at the accounts, the key performance indicators, pull the forecasts apart and look at cashflow to trade it up. If this is successful its value goes up and it looks a better proposition to a prospective buyer," he said.

Banks only want to cash in their investment as a last resort, says Thornton, and prefer the business to trade as usual, as far as possible.

The current market environment means there are more calls for the kind of service Mercury is offering, he added. "Bills are rising, trading is tough and interest rates are rising," he said.

"Some people are losing their way and someone coming in from the outside, offering a fresh look at their business, can identify how to get out of the rough patch. We saved one business £340,000 by improving its buying terms," he said.

Accountants, he added, can't get under the skin of the business in the way that experienced operators prepared to sell their services in this way can. "As long as the business is sustainable banks appear to be more patient than they were a few years ago," said Thornton. "Plus it's incremental business for us in a tough market."

He added that fees from such activity could amount to more than £1m a year, once the new business was fully marketed.