The case for Alvarez & marsal

iSoft plc

In early 2006, iSOFT plc - Europe's largest independent healthcare software company - was forced to issue three profit warnings. The company was facing a critical delay in delivering key software to the NHS, along with a liquidity crisis, declining operating margins and significant debt. The Executive Chairman John Weston selected Alvarez & Marsal (A&M) to lead a significant operational restructuring program to support the turnaround of the company

Over an intense six week period, the A&M team reviewed the entire business, developing immediate, actionable plans for improvement and stabilization and worked with the new COO Bill Henry to produce country by country business plans. Working with the CFO, Gavin James, the A&M team established reliable cash forecasting, developed a product profitability analysis and implemented short term cash preservation and cost reduction measures across the business.

The resulting three year regeneration plan identified a £30m improvement in operating profit which was presented to and approved by the board and the banking syndicate in September 2006. A&M was requested by the board and the banks to support the implementation of the plan, assuming key management roles alongside the full-time executive management team and establishing a program to drive through the changes within the business. At the end of the first six months of trading under the regeneration plan, the company was able to announce results which already significantly exceeded agreed EBIT and cash targets.

A&M assumed the management of product design and delivery, overseeing 1,400 staff in the 'Product' functions in the UK, India, Holland, Germany and Australia. The team also worked alongside the iSOFT Executive management team to renegotiate a number of contracts where iSOFT was in default or where profitability was low.

In November 2006, the company initiated a strategic options review and sale process which A&M supported through to completion. After receiving several offers, the board was able to recommend a final increased offer to shareholders in July 2007. This offer provided full repayment of debt, as well as a premium for shareholders of 40% relative to the 52 week low point.

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