Our restructuring services department specialises in the provision of investigative, restructuring and turnaround services to underperforming and distressed businesses. Our services can be divided into two distinct areas depending on the perspective of the interested party.
Debtor side services are designed to help companies troubleshoot existing problems, for example working capital shortfalls, and to implement strategies to significantly improve their performance. Typically these services are aimed at underperforming or distressed businesses but can also be highly beneficial in optimising the performance of a successful company and provide a powerful early warning diagnostic function.
Creditor side services focus on the lender's requirements, typically by performing an independent business review (IBR) on the borrower. Our tailor-made company profiling packages provide a clear and objective view of the borrower's current financial capacity. Having identified the key issues, we are able to present the lender with the options available to them, for example debt restructuring programmes, to facilitate rational decision making.
Restructuring and turnaround management have been used with great success in the UK and America over the past few years and we are now seeing more and more lenders and companies utilising these services in Central Europe.
- Independent Business Reviews
Our IBR service provides lenders with a clear and objective view of the borrower's current and projected debt service capacity. We review and challenge management's commercial and financial assumptions and provide the lender with a realistic picture of what the company can achieve. Key benefits of an IBR include:
- Real multi-level challenge to management forecasts: commercial, operational, financial
- Realistic set of "post-vulnerability" numbers to baseline and track future performance
- Risks / upsides are fully evaluated
- "Close-up" assessment of the business and strength/depth of its management team
- Reliable basis for valuation / options review
- Business briefing facilitates communication to multiple stakeholder groups/syndicates
- Company Business Reviews
When we perform a company business review on behalf of the management or shareholders of a business, we perform a comprehensive analysis of the business's current financial position, its historic and future commercial operations and the future financial performance that it is likely to achieve. The analysis is usually used when in a position of financial distress to identify how readily the business can meet its financial obligations and to recommend real courses of action that will assist it in doing so. It is a very practical exercise where the financial consequences of various actions will be examined and discussed. Management teams can therefore use it as a blue print for ensuring that they take the most appropriate course of action to avoid any event of default.
- Liquidity reviews
Companies can often go into liquidation despite being profitable due to a lack of free cash. We can quickly assess and analyse the drivers of cashflow, for example; trading performance, working capital, restructuring costs or provision payments. This allows us to identify intra month peak requirements, vulnerabilities and potential upsides e.g. reducing the inventory days to liquidate additional cash. We use this knowledge to provide lenders with an independent view on whether the borrower has adequate liquidity to continue operating normally and thus enable them to decide on how to manage the debt.
- Business stabilisation
When dealing with a distressed business our initial priority following an IBR is to stabilise the operation, allowing time for the development of a comprehensive recovery plan. During this phase we will manage the short term cashflow, negotiate with creditors and address any employee issues.
- Turnaround planning
Once an independent assessment of the business position has been made and the business has been stabilised, the next stage is to develop a systematic plan to bring the business back to health. We work with management to model business outcomes, develop options and decide on the optimum plan for the future.
- Financial restructuring
In some circumstances, either the total financial liabilities of a company are too large, or the profile of the liabilities is so inappropriately structured, that the company will not be able to meet them as they fall due. In this situation management teams can be tempted to try to restructure their liabilities to certain lenders hoping that business will recover in time to allow them to meet their liabilities to others. Typically this only delays the inevitable. Often the only solution that will ensure the survival of the company is wholesale financial restructuring. This will require a comprehensive, detailed and achievable business plan. Once a realistic business plan has been agreed with management a restructuring proposal needs to be developed which should represent a better soliution to each of the lenders than the alternative (often exercise securities over assets). We work with management teams to assist in the development of business plans, restructuring plans, and bank negotiations to perform a comprehensive financial restructuring.
- Implementation and support
Implementing change is never easy even at the best of times but the situation becomes much more complicated in the case of a distressed business. We have hands on experience of negotiating a business through such changes and will assist the management team to achieve the desired outcomes with the minimum disruption.
- Turnaround Manager placements
We can provide independent board level individuals (with senior financial & operational backgrounds) experts to act as Turnaround Managers. Such individuals provide a wealth of knowledge and experience and their independence from the existing management team enables them to be both practical and non-emotive in their decision making.