Teambuy files bankruptcy protection, set to be acquired

Teambuy files bankruptcy protection, set to be acquired

A couple weeks ago, Teambuy surprised (or not) many by filing what is called Bankruptcy Protection! Here are the documents

Teambuy is the largest Canadian based Daily Deal promotions company. And the second largest overall behind Groupon in Canada.

Careful though. This is not Bankruptcy of Teambuy, but rather Bankruptcy protection. So what is the difference?

According to reliable sources, Teambuy will not be closing its doors. It will be restructuring its financials and creditor obligations in order to prepare itself for a buyout. That is correct, Teambuy will be acquired. By whom, no one can confirm yet. That will become public in about a week’s time. However, in analyzing the bankruptcy documents, it states that a company called nCrowd from the USA is providing financing to Teambuy/Dealfind and is in talks to acquire Teambuy/Dealfind. More on nCrowd below.

Over a year ago, Teambuy and Dealfind merged. Despite best efforts to clean up the customer service “mess” that Dealfind left, Teambuy had no choice but to restructure financials because they simply could not get a handle on all the issues revolving around Dealfind’s obligations. Although Teambuy turned a profit in 2013, they still had issues meeting cash flow demands every month. Teambuy is a Canadian success story run by a vibrant and creative team. However, the acquisition or merger with Dealfind caused too many issues for them to continue operating in their present model. Something had to be done.

As such, the best possible situation for Teambuy and future merchant clients and creditors is to be acquired by a larger company that would have the financial ability to manage Teambuy’s current state of affairs. If the acquisition goes through and if Teambuy continues to be promoted and grown, then this will change the Canadian Daily Deal Landscape in several ways. Here’s how:

  1. It is anticipated that many Merchants will stay away from Teambuy in the short term because of the issues surrounding bankruptcy
  2. Competitors like Groupon, Wagjag, Buytopia, Social Shopper, Dealathons and Living Social will benefit most. They will certainly try and convince merchants to work with them even more so now that Teambuy has a “cloud” hanging over them.
  3. Consumers will mostly likely slow down or stop their purchases from Teambuy/Dealfind until the acquisition is finalized and announcements can be made to the market.
  4. If Teambuy is acquired by nCrowd and if they continue to promote Teambuy and eventually remove them from bankruptcy protection then nCrowd would automatically have a significant presence in Canada.
  5. It is not know whether nCrowd, or whomever purchases Teambuy/Dealfind would change the name. (they probably should)

 

Although it is understandable that Teambuy/Dealfind seek out an acquisition at this stage and even understandable that they seek bankruptcy protection in order to reorganize their financials, it is disappointing to see how they or their shareholders have decided to handle the communications around this event. Other than official notices to their creditors there has not been a PR campaign coming out of Teambuy trying to explain to merchants, to media and to consumers the transition they are going through. Instead they are leaving it up to media, bloggers, journalists, social media and merchants to dictate the story line …and that is a BIG no-no and a recipe for a PR nightmare.

For the sake of merchants owed money, for the sake of consumers who have purchased vouchers and for the sake of Teambuy employees who have worked very hard over the years to grow a leading Canadian ecommerce company, we hope that this matter is resolved as quickly as possible.

So who is nCrowd anyhow?
They are a company out of the US that has been buying up distressed deal sites since 2011 or so. Half off Depot bought out Crowdsavings in 2013 to form nCrowd. Other distressed deal providers that have been acquired by nCrowd include Tippr, Saveology, Spreebird, to name just a few. The acquisition of Teambuy/Dealfind would enable nCrowd to enter the Canadian market in a leadership position but with a PR disaster that needs to be managed quickly and effectively. Teambuy is an attractive acquisition for nCrowd given how large Teambuy’s email list is: over 3.5 million members. That is probably more or about the same as what nCrowd presently has. In order to drive other sources of revenues, nCrowd has expanding beyond daily deals to social commerce and local commerce marketing services, assisting merchants with running Facebook contests and helping them improve customer retention. Perhaps they will offer the same to merchants in Canada.

Once the acquisition occurs, the new owners will have to dig themselves out of a PR hole primarily with merchants, then consumers, media and industry consultants/insiders. We will all know if the acquisition goes through with nCrowd by the 3rd week of September. Once we have more information to share, we will do so.

A good review of the present Teambuy situation can also be found at ITBUSINESS.CA.

If you would like direct conversations with us concerning this matter, how to react if you are an investor, an existing deal site, a merchant or media, please reach out using the contact page.

 

5 Comments
  1. whatsyour84@gmail.com'

    I find the manner in which this has and is being handled by Teambuy to be upsetting. Upon review of the Insolvency documents, it appears that the only creditors or merchants that will likely see any sort of money at the end of this are nCrowd whom is supplying DIP financing and B.E.S.T. funds (the LSIF that has financed Teambuy). B.E.S.T. funds has a claim in the amount of $5.5 Million yet the merchants are owed over $8 Million. I am concerned for the many merchants that simply can NOT afford to take the loss from this. How many merchants will end up closing down over this? How many people will loose their source of income? Why is it that the $5.5 Million owed to a Labour Sponsored Fund is seemingly more important that the $8,451,654.00 owed to the merchants (page 7 of the First Report of MNP from your “here are the documents” link)? I hear some merchants are not honoring the Teambuy/Dealfind vouchers due to the fact they have not been paid for. This creates a loss also for the consumer. To say I am upset over this is an understatement! I am one of the merchants that is effected by this to the tune of approximately $40,000.00.

  2. kevinhurley96@gmail.com'

    Should I be concerned about a flight which was booked through teambuyvacations?

    • It is probably best to verify with where you booked it. Especially for travel situations.

    • anon@anon.org'

      Was it a “get access” deal? Those deals are the opposite of regular deals, where the merchants pay teambuy. The travel agency will likely be more than happy to honor your deal without having to pay a cut to a bankrupt business.