Turnaround, Restructure and Corporate Renewal

Reasons for the creation of financial distress or insolvency are numerous.  A difficult local or national economic climate, failure of a significant customer or market, and erroneous strategic decisions are only a few causal factors that may precipitate the downward financial spiral and may threaten survival. 

Regardless of the cause, companies in various stages of crisis require immediate attention.  Symptoms of distress usually appear well in advance of the onset of a crisis, including declining performance, cash flow deficiencies, and eroding collateral positions.  Often, these trends can be reversed if they are addressed early enough with objective analysis and swift corrective measures.

Symptoms of a Distressed Company

Symptoms of a deteriorating financial position may include the following:

• Tight cash situation inability to keep up with payments to vendors, payroll withholding taxes, debt service, property taxes, or rents
• Diminishing collateral or availability on borrowing base reports
• Lenders’ indication of an unwillingness to renew credit lines
• Increasing accounts receivable aging
• Decrease in customer order closure rate
• Additional borrowing necessary to cover operating or cash losses

What can be done?  Our highly experienced insolvency professionals offer a full range of advisory and implementation services, including turnaround and restructuring plans to optimized exit strategies.

In-Depth Analysis

We begin by performing a preliminary analysis of the situation, focusing on key areas believed to be major contributors to the circumstances. In certain cases, an in-depth comprehensive assessment is done where a third party, such as a secured lender, shareholder, or other significant stakeholder desires an objective opinion regarding the viability of the enterprise.  In most cases, a limited scope assessment is performed to determine whether a turnaround could result in recovering the business, without expending significant cash resources on the study itself.

Turnaround & Corporate Renewal

We then make recommendations for developing the recovery strategy, with tactical steps assigned to various professional or paraprofessional team members, as well as internal resources of the company. This methodology helps keep the cost of the recovery strategy as low as possible. Tactical steps may include:

• Communications and strategy development with all affected creditors
• Communications with financial institutions
• Communications with employees
• Development of or validation of weekly cash flow forecast models that include projected collateral analysis as well as other financial forecasting models
• Review of collateral assets for economic quality and realization strategies
• Management of inventories, receivables, and procurement
• Review of and changes in operations areas to improve efficiency, reprioritize production schedules, equipment utilization, maintenance, and inventory management
• Evaluation of utility costs and development of strategies to reduce costs
• Evaluation of personnel utilization and maximizing productivity
• Exploration of opportunities for joint venture, merger, sale, or capital raise
• Review and evaluation of sales and marketing tactics, product pricing, materials procurement, and opportunities for enhancement in those areas