Providing guidance for you and your company, both in the near future and for the long-term
Upstart and time-tested companies alike can suddenly face uncertainty. Unforeseen risks at the global level can come from changes in markets and trade agreements. Company-specific changes in ownership, management, and consumer preferences can also destabilize previously stable companies. Errors in marketing strategy or product development can result in unexpected and unsustainable losses. When such risks threaten your company, you need to address them quickly, but what if you don't know what your options are or what your next steps should be? Without an experienced, unbiased advisor to help you assess the viability of your business and find workable responses to the crisis, your company remains at risk.
Our recommendations and assistance are based on decades of experience assisting companies navigate all aspects of the turnaround and restructuring process.
Timing is key when it comes to finding solutions to business distress. The sooner you consult with us, the more options we will be able to present to you for out-of-court or in-court remedies. We can assist at any point in the process of addressing distress—from the selection of suitable counsel early on in the process to the creation and implementation of a restructuring strategy—and we work closely with your company's management to find all available opportunities to maximize your company's value and avoid the stigma associated with bankruptcy.
Turnarounds and Workouts
Your company has hit the wall. The bank has asked you for a short-term plan to reduce your loans, maybe even demanding that you pay off the loan within 30 days. Your trade suppliers are demanding cash on delivery or even cash in advance. Your customers are complaining about late shipments or requesting that you refund their purchase of unsatisfactory products. Employee morale is suffering, and you suspect that some of your most important staff are sending out their resumes. Proceeding without a plan to address each of these areas of crisis is an invitation to failure, but they don't teach how to address all of this at once in business schools, and there are very few people who've worked through these situations to advise you. Where do you go from here?
We stand out among the few who have navigated companies in extenuating circumstances. Our expertise has been developed by working in situations such as these.
Our immediate objective is to control and manage cash, which is the lifeblood of any company. After we stop the bleeding, we develop a comprehensive plan to improve your company's operations.
At this point, your company would be in a "turnaround" situation. Turnaround strategy involves:
- Sales: We examine your company's product lines and their profitability, culling products that produce little if any profit. Then we focus your company's sales efforts only on those lines that produce profit. We also examine pricing to determine whether the market can sustain price increases, a tactic often overlooked by management as they deal with other pressing issues. At the same time, we examine your existing customer base with an eye toward eliminating customers who don't add much to your revenues.
- Gross Profit Improvement: We liquidate dead or slow-moving items through inventory management and careful examination of existing costing procedures.
- Expense Reduction: We examine each expense currently on your books to determine its value and necessity in the "new" company that will emerge from your turnaround. Our surgical approach—as opposed to the slash-and-burn technique sometimes employed by others who want to cut costs quickly—focuses on the ideal and removes anything else that does not set your company up for success.
Reorganization and Restructuring
Once we've determined that your company can survive and have implemented the steps necessary for ensuring its eventual return to profitability, we address your company's balance sheet, assets, and liabilities to determine the sustainability of the present debt and capital structure.
- Assets: We determine the true value of the assets on your books, eliminating receivables that aren't collectible and dead or slow-moving inventory. Next, we determine whether your company has fixed or long-term assets and, if so, whether they are serviceable and necessary for the operations of the "new" post-turnaround company. Only when your assets have been adjusted to their true book value can you make informed decisions about debt and capital structure.
- Liabilities: Using various financial techniques, we determine the sustainable level of debt that is appropriate to your "new," turned-around company. Often, existing debt is considerably larger than can be sustained, and this debt must be adjusted by negotiation, out-of-court procedures, or more formal methods such as:
- Creditors' Compensation Agreements
- Assignments for the Benefit of Creditors
- Chapter 11 Bankruptcy
- Orderly liquidation, in cases in which no other methods are workable or in which no profitable operations are achievable.