Today we give you the inside track on the collapse of Manches, a horror story if ever there was one.
As we revealed last week, Manches had paid just £90,000 of a £715,000 tax bill, and had a £6.4m overdraft before it went into administration on 14 October. The firm’s financial situation was a mess. Still, where there’s a mess there’s often a lesson to be learned, at least for the survivors.
In this week’s main feature we’ve looked beyond the numbers to find out what really went wrong. Was it the gradual build-up of partner resignations? A lack of communication? The failed merger talks?
No, no and no. Above everything, all the signs point to this being a tale of the calamitous impact of supremely poor cash flow management.
“Many of these senior partners have grown up in an era where the only way is up,” said one source. “There are lots of firms sleepwalking to extinction for this reason.”
Don’t go making the mistake of thinking that the hooking up of Manches and Penningtons is a contrasting romantic story either. Four other firms were approached by Manches during the same period. Still, that doesn’t mean the deal won’t be a success.
As for the aftermath, for any other zombie firms out there, it’s time to heed some lessons.
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