Choices of revival are much enhanced where advisers are brought in before a company is on the point of crashing. There are some notable examples of companies which appointed independent corporate recovery teams under pressure and then managed to achieve remarkable transformations as a result. For example, we were called in to advise the directors to leading fashion manufacturer and retailer with a strong international brand name after it had dipped into losses. Restructuring of the group, management changes and simplified financial reporting systems were implemented. Unsuccessful and nonfinancial performing subsidiaries, many recently acquired, were disposed of and a new equity partner for the group was found. The company's lenders and stakeholders were reassured by the decisive action recommended and taken and the group is now trading successfully and profitably.
In another case, an international conglomerate, with interests ranging from food to finance and property, had run up considerable losses and faced severe financial difficulties. We were once again asked by the directors to help restructure its considerable debts n the face of tension between a multitude of group leaders. We recommended the successful disposal of its major trading asset and a restructuring of the complex debt arrangements and provided solutions to a number of operational issues. The group has survived in the face of a massive change in managerial direction and is now substantially de-geared.
The job of financial investigation and corporate restructuring starts with such questions as:
1. In what businesses is the group involved?
2. What are the market and cost dynamics?
3. How has the group got into treble?
4. Can the businesses be rescued or better exploited?
5. Can we generate the cash?
6. Do we have competent management?
7. Do adequate control systems exist and are they used?
Trouble companies usually have cahsflow problems. Naturally one of the first jobs is to look at the firm's financial controls - its treasury operations, debtor collection and payment of creditors to see what opportunities exist for cash generation so that in the short term the hole can be plugged. Poor financial information is usually a symptom of failures and one of the first things the new team will do is to install simple management information systems. A few strokes of the management accountant's pen often reveal that the product which a firm's directors thought a winner was actually a drain on resources and merely a sacred cow, while other neglected products were actually making a handsome contribution to the company's fixed costs.
In another case, an international conglomerate, with interests ranging from food to finance and property, had run up considerable losses and faced severe financial difficulties. We were once again asked by the directors to help restructure its considerable debts n the face of tension between a multitude of group leaders. We recommended the successful disposal of its major trading asset and a restructuring of the complex debt arrangements and provided solutions to a number of operational issues. The group has survived in the face of a massive change in managerial direction and is now substantially de-geared.
The job of financial investigation and corporate restructuring starts with such questions as:
1. In what businesses is the group involved?
2. What are the market and cost dynamics?
3. How has the group got into treble?
4. Can the businesses be rescued or better exploited?
5. Can we generate the cash?
6. Do we have competent management?
7. Do adequate control systems exist and are they used?
Trouble companies usually have cahsflow problems. Naturally one of the first jobs is to look at the firm's financial controls - its treasury operations, debtor collection and payment of creditors to see what opportunities exist for cash generation so that in the short term the hole can be plugged. Poor financial information is usually a symptom of failures and one of the first things the new team will do is to install simple management information systems. A few strokes of the management accountant's pen often reveal that the product which a firm's directors thought a winner was actually a drain on resources and merely a sacred cow, while other neglected products were actually making a handsome contribution to the company's fixed costs.
