Since 2002, turnover at AdVal has fallen from £5.2m to £2.6m, whilst figures at the interim stage of the current year shows a further fall of 44% in turnover.  The Group has also been building up substantial losses, with £9m shown in the accounts since 2002, as a result of trading not going as planned and a couple of restructurings to swell the exceptional costs.

In addition to the significant fall in turnover, this years interim results also included the announcement that the Group had agreed terms for an acquisition that would help to strengthen the company.

Admittedly, the 30th December looks an unusual time to announce such a significant move, an announcement that most companies would make with a full fanfare.  But for AdVal, it was issued late in the afternoon, the day before new years eve, a time when many people would have been in holiday mode.

At the same time, it was announced that to facilitate the deal, long term AdVal boss Dennis Quilter was standing down and three new directors would come join the Board when the deal was completed.

Within the month, AdVal confirmed they would be buying Maxim Learning Ltd (then owned by Root Capital), and a couple of weeks later the deal was signed giving Root Capital a stake of over 30% of the enlarged AdVal Group.  The Directors joining the Board were Simon Philips, Edward Mallinckrodt and Timothy Critchley, with Simon Philips and Edward Mallinckrodt also being the partners of Root Capital.

The deal itself was officially completed on March 16th .

A trading update in June highlighted that there had been several new contract wins, but slow progress on these and delays in existing contracts meant trading was significantly behind expectations.  A further trading update at the end of July didn't make for any more positive reading, where in fact things had got so bad, the Board had decided to seek buyers for the business, separating it into three units: the generic e-learning business, the bespoke e-learning business (which included the work of Maxim) and the online mentoring services provided by Livementor.

The proposed buyer of the bespoke business (Maxim and AdVal Learning Services) was identified as a linked business of Root Capital (who now owned 45% of AdVal).

Tagged on the end of this announcement was the statement that Tim Critchley, who joined the AdVal Board at the time of the original Root Capital deal was leaving to join Knowledgepool (another e-Learning company owned by Root).

And now, 258 days after the original statement highlighting the potential deal, and only 182 days after the deal was officially completed, the AdVal business has gone into administration. Root Partners have withdrawn their offer for the bespoke development business, whilst negotiations for the sale of Livementor have also been terminated.  The deal for the generic operation has been completed.

The aim of the deal to bring Maxim within the AdVal Group was to strengthen the balance sheet, provide the larger group with access to additional funds, and to spread costs of over a larger base whilst removing duplicated costs.  And whilst the enlarged AdVal Group were successful in gaining new business, it doesn't look as though they were generating enough cash to finance the business.

The key player in all of this is Root Capital, as they hold a 45% stake in AdVal and are also the company who pulled out of the deal for the bespoke development business.  What happens to the Group will be determined in a large part by their actions.  

Would a cash injection be enough to allow the Group to trade its' way out of it's difficulties, or will Root Capital (or some other party) decide to buy the bespoke development business at a discount now that it has been placed in administration, possibly leaving a shell company that has a stock market listing and tax losses which may be carried forward.  Alternatively, the business could be left to wither away, but with several new contracts signed, this isn't too likely.

A great deal has happened at AdVal in less than 9 months, and being placed into administration is pretty decisive action.  The next few weeks should see the story unfold a little further.