Oyster Yachts gone into administration

I will be amazed if this company is not rescued. If I had to chose to rescue Southerly or Oyster I know which I would chose. It is my understanding that Oyster dropped all the smaller boats and that the smallest boat you could order was the 565 and joining this club now costs £1.5m or did so last week. It looks to me as though the management had all their ducks lined up for the future, but have been wrong footed by their owners. The smaller boats took up production space for bigger boats which were far more profitable and with a 2 year waiting list it looks as though they were very much focused in being profitable.
 
"Goodwill" is a meaningless term except as in its definition. It is the difference between the book asset value and the purchase price. So just a calculated figure coming out of the decision of the buyer. It is not something that has an independent value. Sure you can use a rule of thumb such as Y* average profits but a buyer of this collection of assets will base his offer price on the returns he expects to get in the future. Given that he is almost certainly going to make substantial changes to the way the business operate, any connection between the offer price and any previous profits will be tenuous.
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That in itself is an interesting question, and perhaps not really one for this thread. However, I agree it is one of the more / most controversial subjects. I was making a point in particular about goodwill, but suggesting exactly the point others have made that there is little relevance between the B/S and the price paid for the business. That aside, any advisor will have in mind a basis for assessing the goodwill of a business. It will not be one universal to all businesses, and it will be subject to hot debate - inevitably partly why A will be prepared to pay more for a business than B (other factors like it sounds as if it will be a fun hobby may come into the equation!). Never the less for some businesses the principles are pretty well established (for example firms of accountants) but much less well established for tec. companies.

I doubt there will be many financial advisors brve enough to report to the Board when asked how they arrived at the Goodwill they recommend the Board agree to buy that would say - "well we stuck a finger in the force 6 and thought up a number that we thought you might all like". That at least is a scenario I have yet to see, well at least from anyone who was getting paid for their service. I might well not agree with the basis used to arrive at the number, but at least they will have a basis and 9 times out of 10 you can make a pretty reasonable guess at what that basis was depending on the business. So, as you say, for it to be a calcualted value, it will be supported by at least some form of methodical calculation, one with which you or I might disagree, but never the less with methodolgy.
 
£1.5M for a boat does not sound that much when you consider how many they pump out a year and the high labour costs together with fixed costs.

However it does not matter what the true state of the business is if your backer or your bank pull the rug on you - then who in their right mind is going to pile in and save you? I mean its not if as they are a football club. ;-)
 
BTW I agree with an earlier poster - a super buy if you wish to be in that market. Set up as it was with a signifcant third party liability and the potential for a long running dispute which they probably would have lost is no place to be - any investor will dislike the uncertainty and the lengthy pay back. Free of that risk and with sensible PL in place this is a company that has a tremendous pedigree, from what I have seen every evidence that it can be operated at a healthy profit, and with fewer than ever competitors at the same market point.

I shall also be very surprised if someone doesnt pick up the business and be very peased they have.

I cant think of any other builder at the moment that I would rather take on, including Beneteau, not because there arent other good companies but I just feel Oyster have a superb product, positioned in the right place in the market with a long a profitable performance.
 
ip485 said:
I doubt there will be many financial advisors brve enough to report to the Board when asked how they arrived at the Goodwill they recommend the Board agree to buy that would say - "well we stuck a finger in the force 6 and thought up a number that we thought you might all like". That at least is a scenario I have yet to see, well at least from anyone who was getting paid for their service. I might well not agree with the basis used to arrive at the number, but at least they will have a basis and 9 times out of 10 you can make a pretty reasonable guess at what that basis was depending on the business. So, as you say, for it to be a calcualted value, it will be supported by at least some form of methodical calculation, one with which you or I might disagree, but never the less with methodolgy.
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In practice financial advisers are not asked for an assessment of goodwill, and accounting matters are unlikely to be relevant to Oyster's potential future.

A purchaser is primarily interested in free cashflows and what he must pay for them. To determine this accounting entries such as goodwill, depreciation, amortization and usually interest payments are disregarded and figures for expected capex, additional working capital, R&D, etc are subsituted in their place. The accounting value of assets is essentially irrelevant as a due diligence team will be appointed to asses their condition and mark to market values.

The question of liabilities may be a biggie here. There is functionally no public information regarding Oyster's predicament, so this thread is merely speculation. However, any potential claim re Polina Star III and other Oyster owners with similar worries will have to be assessed as to their magnitude and relationship with the company's assets. Then there is the question of the several big boats in progress, the reputational risk of dumping them if necessary, and on it goes.

There's insufficient information to quantify any of this, there are several on here who possess such information, but should it appear a request will surely be made to close this thread!
 
Seven Spades said:
The smaller boats took up production space for bigger boats which were far more profitable and with a 2 year waiting list it looks as though they were very much focused in being profitable.
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Doesn't a two-year waiting list suggest that they were seriously underpricing their products. Cf John Harvey-Jones vs Morgan Motor Company.
 
In practice financial advisers are not asked for an assessment of goodwill, and accounting matters are unlikely to be relevant to Oyster's potential future.
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That is me out of business as well then. :) Times have been very good in the past.

The fact that the main investors have baled out?
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I guess we have taken some time exploring why this may or may not be the case regardless of underlying profitability. You may well disagree.

A purchaser is primarily interested in free cashflows and what he must pay for them.
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I have to say that is a very cynical opinion, but may well be true in some sectors. It is not my experience at all, nor has it every been the approach I would be prepared to adopt. I think there are plenty of stock market punters that follow that particular road, but then they are a breed to themselves, and fortunately not influencial in the take over market at least in my experience.

Anyway enough said. It has been a very interesting debate. I hope Oyster prosper and I dont wish to get overly involved in technical matters as I am sure it detracts from the general discussion.
 
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160 employees could raise a fair amount of cash. Previous owners like lord Sainsbury’s have deep pockets £2.6 billion (2008).

Make it a partnership- Oysters up date end up much better quality than they are now it employees have a vested interest in the company. They would also be less of a burden for Employer NI.
 
pvb said:
They used to, but surely not in recent years.
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Yes still did until the end, wasn’t any moulding facility at Hoveton, not sure if they moulded anything in Southampton but still saw the notifications from Police about the abnormal load movements between Norfolk and Southampton so would guess not.
 
NormanB said:
£1.5M for a boat does not sound that much when you consider how many they pump out a year and the high labour costs together with fixed costs.

However it does not matter what the true state of the business is if your backer or your bank pull the rug on you - then who in their right mind is going to pile in and save you? I mean its not if as they are a football club. ;-)
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add another £2M to that figure for the larger yachts
 
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