Thursday, 14 January 2016
What can we learn from Tiger Bills demise?
The Lifestyle Hospitality Group (TA Tiger Bills and other suitable names) was on Crowdcube at the end of last year.
They were raising £500k for expansion. It didnt succeed.
We commented at the time that they didnt seem right for expansion.
The business is now closed, in the throws of a 'sale'.
So what can we learn from this? Well firstly that the Crowd cannot always be fooled into throwing its money away which has to be some comfort.
Unfortunately there is a more serious lesson here. In the financials published on Crowdcube, the company showed a reasonably healthy balance sheet for the previous 12 months to June 2015. Profits for the following 12 months went from £300k to £800k - things were looking great. There was certainly no indication that failure to raise the £500k would result in total collapse. A healthy £2m sat on the balance sheet prior to any investment - or so they said.
These of course are the financials that the Crowdcube out to lunch department would have spent many hours checking over - to ensure that their investors were given good, clean, accurate information. These figures were also completely unaudited and it would now appear were fictitious. You have to ask why an outfit making money would close and then 'sell'. The damage caused by closing outlets is not often recoverable.
Of course as with all things like this, we wont know for sometime what the true facts are. Someone obviously does.
It really just begs the question again - why have we not got some real due diligence service to help prevent ECF going off the rails.