Avoid Insolvency & Break the Cycle of Business Failure
Early intervention increases the chance a business can be successfully reconstructed, with consequent prospects for survival & profitability.
Unfortunately the shareholders, management, or creditors, often, only approach us after a business has been failing for a lengthy period, and may
already be insolvent.
Successful turnarounds usually require:
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Attention to the issues at the earliest time
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An experienced manager
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An effective strategic plan to achieve stakeholder goals.
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Adequate skills & resources being available to the business
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Some viable business products and/or services
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A plan to reduce costs quickly.
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Availability of bridging finance, or saleable non-core assets, to provide working capital
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New capital & shareholders to lower financial risk.
Background
A business may be in crisis, brought on by fast growth, changing economic conditions, global or local competition, or changing consumer demand. The
inability to react quickly to the changing circumstances, creates a downward spiral for the business, with falling demand from customers, a lack of
confidence from suppliers and a loss of employee morale.
Owners and management, while expert in their profession or industry, may not possess the necessary skills or objectivity to steer the business through
the challenges facing a business in decline. Fear of losing control of the business assets and the prospect of surrendering any value from their
investment, have long discouraged stakeholders from facing up to these issues and dealing effectively with them.
In most cases the business will continue to struggle, until finally the bank, or another creditor takes formal legal steps to protect its exposure. A
formal insolvency appointment can permanently damage a business, as it will often trigger contractual default provisions, or disqualify the business
from holding vital licences and accreditations. This is in addition to the actual costs of the appointment and the damage to the business' reputation.
Rarely does a business survive this process intact, as the options available to a liquidator and receiver are limited, by the advanced state of decay of the business.
Following our appointment we will conduct a detailed review & analysis of:
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Historical and forecast trading performance
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Working capital requirements & cash flow
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Unprofitable business and product lines
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Non-core assets
Urgent action is usually required to:
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Establish credibility with lenders & other creditors
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Restructure &/or downsize businesses
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Prepare & implement cost reduction programs
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Reduce working capital requirements & improve liquidity
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Resolve shareholder and/or stakeholder disputes
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Formulate appropriate KPI reporting to monitor business performance
Where the business requires significant capital, or debt restructuring, other corporate advisory services are provided including:
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Negotiation of forbearance agreements with lenders, debtors and other parties of interest
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Performance of due diligence for refinancing or restructuring proposals.
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Advice on the disposal of non-core businesses.
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Advice on the raising, or restructuring of equity, quasi equity and debt finance.
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Preparation of Information Memoranda.