Several firms prepare takeover bids for loss-making company while its brand is still good

Consultant KHK is preparing a takeover bid for embattled firm MDA Consulting. KHK is understood to be among several companies considering an acquisition of MDA, which last month reported a financial loss and lost both its chairman and finance director. Between them the two men own 26% of the firm.

A source close to KHK said: “When you look at MDA’s annual report, it’s fairly easy to see there are opportunities to make savings there.” MDA has a turnover of £9.5m and employs 140 people, including 20 administrative staff. It has 11 offices, eight in the UK and three in Europe, in Belgium, Czech Republic and Hungary.The firm had been planning to open further offices in East Anglia and the Southwest. The source said MDA had an attractive brand despite its troubles.

When you look at MDA’s annual report, it’s fairly easy to see there are opportunities to make savings there
Industry source

Chairman Charles Johnston and financial director Ian Storier are understood to have left MDA after a boardroom dispute. The company’s latest results show it made a small loss for the year to 30 September 2005 of £5,300. Johnston owns 16% of MDA, while Storier owns 10%. Johnston told QS News he was still to reach an agreement with MDA regarding his stake.

The source said: “Charles Johnston put the company into receivership four years ago and relinquished all responsibility to shareholders (who then owned about 70% of the firm). They all lost their shares and MDA lost all its liabilities to creditors. Yet three years later they are still struggling to break even.” The firm has around £2m of debt on its accounts.

MDA went into receivership three years ago but is still struggling
Industry source

The source added that KHK was currently “cash strong”. Last year KHK employed 45-50 staff and posted a £7.2m turnover. It has offices in London and Leeds.

It is understood KHK is looking to acquire between 51% and 100% of MDA. KHK would be likely to keep some existing shareholders working at MDA in order to keep them committed to the business, the source said.

Source

QS News