Your company may be, or may already be, in a crisis situation. Results are falling and therefore (soon) so is the liquidity position. The bank's special management department may already be in the picture.
Everything is now about insight, speed and making the right decisions. This is to get the company back on track and limit damage. In these corporate restructuring situations, Kruger, an authority in this field for over 35 years, often comes into the picture.
First priority in (potential) crisis situations is to quickly gain insight and immediately follow up with adequate planning. Internal and/or external causes must be identified and then resolved or responded to appropriately.
Which are they?
There is often a need for better management information, real and objective insight into how the various parts of the company (can) perform. Where is the pain and where are opportunities perhaps not yet or insufficiently exploited? Where is earned, where is lost?
An insufficient liquidity position can lead to (imminent) deficits, inability to pay creditors and taxes and inability to invest. How will the liquidity position evolve?
Continuing along the same path without changes does not give confidence in realising a good future. Corporate restructuring can offer a solution, but this requires a thorough understanding first.
The crisis situation at a company can arise from all kinds of causes, and often combinations of them. Examples include rapidly changing market conditions, the loss of one or more large customers, an overly heavy cost structure, production with too low an efficiency, projects with unexpected ‘bleeders’, mergers or acquisitions that turned out badly, investments that do not pay off enough or quickly enough, an organisation that is no longer set up in a forward-looking way, lack of timely innovation of products and processes, or an internal instead of customer-oriented focus.
There is often insufficient up-to-date and predictive insight. Yet action should be taken on the basis of what is available. To regain stakeholder trust, insights will preferably have to be validated or jointly prepared by an independent expert. This requires creativity, experience, frame of reference and decisiveness in addition to knowledge.
An objective, external analysis of the current starting position of the various business disciplines helps in a corporate restructuring process. The analysis includes sensible measures and forward-looking plans and their impact on operations, liquidity and financing.
The analysis is focused on aspects such as:
A good management control system provides information to assess the company's performance against its strategic goals. This is also in the interest of all stakeholders. Clear KPIs such as result/activity/customer and a ‘rolling forecast’ are part of this.
Those directly involved and the company are going through a difficult and challenging period. All key business disciplines are affected. Ultimately, it is all about people. For instance, the management may be (partly) no longer forward-looking. Or there are disputes/conflicts between shareholders, between shareholders and the board or due to an internal battle over succession. Due to undesirable circumstances, management may also be (temporarily) gone.
The analyses and pragmatic recommendations can be used directly for restructuring: improving returns by halting losses and exploiting identified opportunities and possibilities.
Valuation of a company actually involves identifying the future cash-generating capacity (cash flows) of a company, and discounting these against the company's specific risk profile. Calculating an enterprise or equity value can be done in several ways. The challenge lies in the underlying assumptions. This requires in-depth knowledge of the company and industry. Including a realistic vision of the future.
Thoughtful communication with all those directly involved is key. It is important that they gain (renewed) confidence to cooperate in a successful solution route through corporate restructuring. In cooperation with the company management, Kruger ensures that ‘what needs to happen, happens’ and ensures optimal communication between all parties involved.
Here, the extensive network plays an important role. For example, are top legal and tax specialists needed? Then we will arrange that.
Most companies develop positively through restructuring in a special management or ‘turnaround period’. This does not happen automatically. The heavy burden usually rests on only a few shoulders. The (specialist) knowledge and experience needed for these circumstances is lacking. Someone has to help take charge. This is where external support helps. Through intensive guidance based on insight and decisiveness, the necessary changes can be realised.
How to achieve a realistic and decisive action plan
Managing Partner
Partner
Partner