Corporate Restructuring Advisory

Critical aspects of a corporate restructuring

  1. Detect a critical situation in time
  2. Always keep a watchful eye on the liquidity
  3. Considerable time pressure for all participants
  4. Successful management of the turnaround
  5. Sustainability of the corporate restructuring
  6. Immediate sale vs. corporate restructuring

Detect a critical situation in time

It is often the case that crises remain hidden for a long period of time. Thus, it is a true challenge to discover possible early warning signs and therefore to act proactively. There are no clear indicators as every company has its own individuality and characteristics. It is very common that a company does not recognize the gravity of the situation until liquidity shortages are already a present issue. However, the scope for action is then rather small.

Always keep a watchful eye on the liquidity

The liquidity is the oxygen of any company. In case of a liquidity constraints, it is crucial to monitor your own liquidity situation. By managing your liquidity in a structured way by considering existing credit lines and your liquid funds, it is possible to largely predict liquidity shortages. A well-timed turnaround with the help of external specialists reflects an appropriate countermeasure to successfully prevent liquidity crises.

Considerable time pressure for all participants

As a general rule, comprehensive restructuring programs are based on a holistic approach rather than on a fragmented one. Therefore, in order to successfully implement a turnaround, it is necessary to incorporate all relevant stakeholders (particularly banks, clients, suppliers and potentially public organizations). There is seldom enough time available to think over important decisions in a restructuring process. For this purpose, it is advisable to ask for assistance from a qualified partner.

Successful management of the turnaround

As a first step, the current situation of your company including all relevant divisions has to be determined and it has to be ensured that your company has sufficient liquidity at all times. Operational activities can only be continued as long as there are sufficient liquid funds. In the long-term, however, enhancements regarding your costs and earnings structure, balance sheet adjustments as well as strategic reorientation will lead to a gradual recovery of the competitive position of your company.

Sustainability of the corporate restructuring

A permanent positive development of your company can be expected as long as all relevant divisions are being incorporated into your comprehensive restructuring concept. However, the causes for the corporate crisis have to be spotted and resolved. Finally, reasonable measures can be defined to lead your company back to the route of success in the long run. In this respect, corporate restructuring can absolutely be described as „sustainable“.

Immediate sell vs. corporate restructuring

The value of an enterprise is strongly dependent on the ability of your company to generate positive cash flows in the future for the subsequent owner. A company with expected negative cash flows will probably not achieve an attractive company valuation und therefore will be sold lower than its potential value. Therefore, a successful restructuring of your company does generally lead to a higher selling price on the market. Provided that an elaborated restructuring concept is existent, the opportunities for a higher price can be significantly increased, even tough its realization is still in the early stages.

The immediate selling of a company can only be considered to be appropriate, if the risk-to-reward profile of a solo effort has an unfavourable prognosis and the success of the restructuring process is uncertain. However, this risk can be minimized with the help of external experts.

 

Perspectives

An economic crisis (e.g. such as COVID-19) are resulting in significant operational disruption for many companies and impose an additional burden for you and your management. The prospects of success of a reorientation can be increased through a timely analysis of the current situation, a systematic and practice-oriented preparation of the restructuring concept as well as a timely implementation of the required measures.

While you focus on your daily business, we support you in the development and timely analysis as well as in the specific implementation of the restructuring plan.

 

Our Approach

  • Cash-flow Management: Monitoring of short-term cash-flow need and contingency planning. 
  • Restructuring Plan: Evaluate the debt and capital restructuring options and support negotiations.
  • Balance Sheet Structure: Review operating and non-operating assets and identify assets for divestment. Evaluate financial ratio (KPIs) improvements and monitor covenant compliance.
  • Refinancing: Assess available options and negotiate favourable terms and conditions in the capital raising process (including convertable loan and equity).
  • Divestments/M&A: Identify divestments of non-strategic assets, prepare, run and coordinate the sales process as M&A lead advisor. 
  • Tax Planning: Optimise tax cost both on corporate and stakeholder level considering available restructuring measures.  
  • Liquidation: Management of the liquidation process and act as independent trustee/administrator in the insolvency process under Swiss law.

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