Powa collapse shines light on tech restructuring
Finding a buyer fast after the collapse of one of Britain’s brightest tech start-ups
Powa Technologies was one of Britain’s brightest tech start-ups. Once valued at $2.7 billion and asserted by some as the next big challenger to Amazon and Apple Pay, Powa went into administration on 19 February 2016, with Nick Edwards and Rob Harding of Deloitte’s Restructuring Services practice being appointed joint administrators. Given the group’s precarious financial position, the administrators had just a couple of weeks to find a buyer.
Powa was a global business focused on making it easier for consumers to buy goods from a mobile device through its PowaTag division. It also sold point-of-sale hardware and software to suppliers of goods and services through its PowaPOS business, and designed and managed the e-commerce web platforms for a number of customers through PowaWeb.
The collapse of Powa shines a light on an increasingly important area of the market for restructuring practitioners - as the world becomes increasingly driven by technology, more tech businesses will be subject to challenge or failure. Conventional wisdom would suggest that it isn’t possible to successfully restructure or sell such a business through insolvency; not least because of the complexity and number of moving parts, the people-based nature of the intellectual property (IP) - the value effectively leaves the office every evening. Further, the Powa business was operating on a ‘pre-revenue’ basis, requiring material ongoing funding without any guarantee of ultimate viability. In addition, the contractual/IP situation was complicated because the IP was held in disparate locations and subject to various legal disputes.
In these difficult circumstances and under intense media scrutiny Deloitte successfully negotiated the sale of the PowaTag, PowaPOS and PowaWeb businesses, preserving 69 jobs. Our work helped end a lengthy period of uncertainty for a number of stakeholders, including employees, some of whom had not been paid for two months when we arrived.
Impact Report team