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Strategy and restructuring

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Latest posts by Dani­el Bru­ell­mann (see all)

Serious mista­kes made while busi­nes­ses are still pro­fi­ta­ble may cau­se rest­ruc­tu­ring needs.

Pro­fi­ta­bi­li­ty impro­ve­ment, tur­naround or even liqui­da­ti­on, need a via­ble con­cept with a cohe­rent stra­te­gy and detail­ed mea­su­res addres­sing stra­te­gi­cal, struc­tu­ral, ope­ra­tio­nal and finan­ci­al issu­es and solu­ti­ons to be imple­men­ted as soon as pos­si­ble with sup­port of sta­ke­hol­ders.

Dis­tress can be cau­sed by fai­ling to secu­re finan­cing which can be main­tai­ned in the long-term. Exces­si­ve indeb­ted­ness can be a result of using unrea­listic finan­ci­al pro­jec­tions or delay­ing opti­mi­za­ti­on of working capi­tal and not necessa­ry assets.

Com­pa­nies which, for wha­te­ver rea­son, lose their pro­fi­ta­bi­li­ty are often in the dif­fi­cult situa­ti­on of not being able to imple­ment new pro­jec­ts and even sli­de into insol­vency. Latest at that point, Inves­tors goals will look very dif­fe­rent than bor­ro­wers.

Finan­ci­al cons­traints  or evi­dent insol­vency risk requi­re quick action. Liqui­di­ty and finan­cing must be secu­red and mana­ged, pro­fi­ta­bi­li­ty impro­ved and value con­ser­ved.

Howe­ver, via­ble tur­naround con­cepts are only via­ble with a cohe­rent stra­te­gy and ade­qua­te mea­su­res addres­sing cri­sis situa­ti­ons and con­vin­cing sta­ke­hol­ders that it can be imple­men­ted suc­cess­ful­ly.

An exter­nal team com­ple­men­ting busi­ness, rest­ruc­tu­ring, legal and audi­t­ing skills and qua­li­fi­ca­ti­ons can effi­ci­ent­ly add resour­ces for an unbia­sed ana­ly­sis of the situa­ti­on and the imple­men­ta­ti­on of urgent mea­su­res. It can also help fin­ding con­ver­gent solu­ti­ons accep­ta­ble to the par­ties even fol­lo­wing unpro­duc­tive nego­tia­ti­ons.

How we can help

Among first mea­su­res, we can put  in place a Tur­naround Dash­board collec­ting most rele­vant infor­ma­ti­on to sepa­ra­te value crea­ti­on from dest­ruc­tion. Then a rest­ruc­tu­ring plan prio­ri­ti­zes first mea­su­res to opti­mi­ze sol­vency with the help of a liqui­di­ty con­tin­gen­cy plan until secu­ring lon­ger term finan­cing.

Tho­se who know and will lead the busi­ness in the future should be part in the defi­ni­ti­on and hence imple­ment stra­te­gic and ope­ra­ting mea­su­res for pro­fi­ta­bi­li­ty impro­ve­ment. Howe­ver, manage­ment is usual­ly absor­bed in figh­t­ing sym­ptoms. In such a situa­ti­on, it is often use­ful to invol­ve exter­nal spe­cia­lists to take urgent finan­ci­al mea­su­res. They thus might bet­ter demons­tra­te to the inves­tors the eli­gi­bi­li­ty for finan­cing of indi­vi­du­al busi­nes­ses and pro­jec­ts.

A third par­ty may also be use­ful to media­te bet­ween the bor­ro­wer and len­der con­ver­gent solu­ti­ons accep­ta­ble to both par­ties when nego­tia­ti­ons are get­ting nowhe­re, or to arran­ge ade­qua­te alter­na­ti­ve refi­nan­cing through dif­fe­rent mea­su­res and instru­ments.

Debt mora­to­ri­um or refi­nan­cing with debt can­cel­la­ti­on can make sen­se also for credi­tors in the con­text of a rest­ruc­tu­ring and reca­pi­ta­li­za­ti­on. But a finan­ci­al rest­ruc­tu­ring can hard­ly last wit­hout remo­val of the stra­te­gic, ope­ra­tio­nal or per­so­nal cau­ses of dis­tress.