If continuity of your business is at stake, fast, focused and decisive intervention is key. Financiers, insurers, tax authorities, creditors and unions may unexpectedly require the bulk of your attention.
If you want to regain control to get your company back on track and out of crisis, you’ll need to move fast and limit losses. In such critical circumstances, our interim managers are ready to step in and help you try and avoid bankruptcy, starting by improving efficiency and revenue. They’re standing by to support you in finding your way back to profitability.
Restructuring or Recovery?
Oftentimes, these terms are used interchangeably. Most people have a general idea of what these words mean, but there’s a big difference in approach and timing on the curve of decline as to when either would apply.
When companies are faced with a challenge regarding continuity, we can distinguish various stages. In the first stage, revenue declines and losses are typically absorbed through financing. In stage 2, assets are under pressure, liquidity issues come up and as losses mount, equity dwindles. It’s possible that the company can no longer live up to its financing obligations. In stage 3, liquidity becomes a real problem and suppliers and staff may not get paid any longer – or only after delays. In the final stage, the company needs to file for bankruptcy and a restart may no longer be feasible. One of the few remaining options may be a (partial) takeover, sometimes indicated as distressed M&A.
In situations where there’s still time and resources to, for example, put together a new a new business plan for the company, negotiate a social plan with the unions, outsource functions or sell parts of the organization, we speak of restructuring. Sometimes this is referred to as corporate restructuring, and could include debt restructuring or financial restructuring. This would typically occur in stage 1 or 2.
Should your organization find itself at the tail end of stage 2 or beyond, we would speak of recovery. This is also referred to as ‘corporate recovery’, which equates to ‘return, preservation, revival, rescue or cure’. In other words, ‘salvage what can be salvaged’. During a recovery process, you will want to focus fully on getting your business back on track and avoiding any unwelcome attention from creditors or the bank placing you under administration. At this point, you will have been dealing with negative cashflow for quite a while already, necessitating reorganization or the sale of assets (divestiture). A quick and appropriate response will be required to stave off further losses and the threat of bankruptcy. Such a response could consist of developing a recovery plan and its immediate implementation, discussing the situation at hand directly with banks and financiers and going over possible solutions, touching base with creditors or tax authorities about an extrajudicial debt restructuring with creditors, or arranging for a possible restart of the company.
When it comes to the recovery of companies in trouble, typical tasks that our interim managers handle include:
Conducting a quick scan: which options are available to improve return on investment in the short and longer term? What perspective do we have and what would be the right approach?
Restructuring and reduction of cost: coming up with a plan to improve revenue, including implementation. To this end, we can leverage the expertise of Crossings Advisory experts, who can be counted on to provide a broad skill set and specialist expertise.
Financial prognosis and impact analysis: what’s the forecast for the company’s financial situation and liquidity? Do the actual numbers make sense compared to budget? What’s the impact of the chosen approach on the company’s liquidity? Which faucets needs to be turned off? Most of our clients are in the process of
Organizational structure and development: what would transformation of your business mean for various positions and functions? What would be the impact on recruitment and departure of staff?
Change Management; how do we ensure that the intended recovery actually materializes? How do we increase the likelihood of the plan yielding the desired result.
Stakeholder management: at a time of crisis, communication with stakeholders is paramount. How do we secure their buy-in to the company’s recovery?
Consultancy and Coaching: as needed, we can leverage the expertise of Crossings Advisory transformation experts. They will be available to support our interim managers in the areas of strategy, mergers & acquisitions and restructuring if required.
Mergers & Acquisitions: sometimes a merger or take-over can be a viable option. Suitable candidates would need to be found within the tentative timeline and every aspect of the deal would need to be considered and accounted for. Subsequently, integration would need to be implemented swiftly. What’s the best approach?
When your company is in financial distress and confronted with liquidity problems, refinancing your obligations can provide short-term flexibility. Entering into direct negotiations with creditors to reorganize the terms of the debt payments is an intense process and, at the same time, your focus on business transformation is required. We can handle these critical renegotiation processes on your behalf, which may lead to, for instance, a debt-for-equity swap, bondholder haircuts or informal debt repayment agreements to restore liquidity, so you can continue focusing on operations.
Insolvent and looking to avoid receivership?
Maybe all you need at this point is a sounding board. Should immediate intervention be required, we will gladly provide the interim support you need – whether it’s a matter of a stress test and forecasting cashflow, managing conflict, debt settlement, reorganization or coming up with a comprehensive recovery plan, we will find you the right people.
We can do this during or outside of regular business hours. If you wish to discuss opportunities to increase revenue or avoid bankruptcy, we’d be happy to talk, in confidence and with no strings attached.