Stabilising the immediate liquidity crisis
The first stage in assisting a distressed business is to manage the immediate crisis, which in this case is a potentially fatal lack of free cash. In such a situation the business is prevented from trading its way out of its difficulties as it cannot fund its suppliers or payroll and cannot therefore support any further sales.
We immediately review bank statements and cash forecasts in order to establish the exact position of the company. From here we can construct achievable payment plans with suppliers and prevent further loss of credibility.
At this stage we will also identify any 'quick win' initiatives such as collecting overdue cash from debtors. When a business is in crisis such assets are often overlooked in the panic to meet supplier obligations.
Assuming full or partial responsibility for the interim management for the business
Initially we strongly advocate that the existing management team should continue to run the day-to-day operations in the initial period so as to minimise disruption and panic. However as difficult decisions will need to be made and strong leadership is paramount we will take over the high level leadership of the company in most cases.
Provide a platform for stakeholder negotiations
Trust and credibility may have been eroded by the decline in the business which resulted in the crisis. We can help to rebuild relationships and lead negotiations with key stakeholders such as lenders.
Other important stakeholders include employees, creditors, key customers, landlords and shareholders. We are sensitive to the varying viewpoints and requirements of these parties and have experience in effective communications in order to gain buy-in from all sides.
Establish forecasts and a comprehensive business plan
Once the immediate cashflow crisis has been averted, the business must look forward and plan how to strengthen its position and develop a strategic roadmap.
This phase of the process is critical both for the business itself and for its lenders, who will need to be convinced of the viability of the business as a going concern. We will assist the business from the 'bottom up' to build realistic, achievable forecasts, based on robust and validated assumptions.
Lead financial restructuring negotiations
In most cases it is necessary to restructure the loan portfolio and with the existence of multiple lenders this can be a complex and time consuming process. We can remove this burden from management thereby allowing them to concentrate on the trading and growth required to move the business forwards.
Seamlessly pass the leadership back to the company's management team
The restructuring process is finite and the ultimate aim is to return the company to its management team in a position of strength. We recognise that this can be a precarious stage in the process and therefore carefully plan our exit so as to support and empower management.