Corporate Turnaround and Renewal
Many businesses fail when they could have been saved had appropriate advice been sought and the required action taken. A basically viable business may otherwise be closed down because of a particular event or series of events which with suitable help may have had a strong future.
There are many alternative methods available which if used with care, and early enough, can "ring fence" an old problem and give a firm foundation for the future of a business. A very high proportion of the problems which cause a business to falter or fail are related to financial management issues. Inadequate or inappropriate management information causing inappropriate or delayed decisions, no clear business focus or plan, poor administration procedures leading to expensive errors, and many more.
Many people speak of the “decline curve” when looking at failing businesses …
This chart shows how over time the directors lose control and events are dictated by others. The earlier in the curve that outside help is sought, the more palatable the solution. Remember directors do not set out to run distressed or insolvent companies, so often have no experience or knowledge of how to deal with the situations that arise.
Before any solution can be contemplated it must be established precisely how the past problems have arisen and what action is necessary to prevent a reoccurrence. Then a clear business plan must be built for the future showing a realistic recovery path for the business. Only then can the actions necessary to give this fresh start a firm foundation be considered. An inappropriate solution may be worse than no solution at all.
In many instances if the position is serious enough the business may already be insolvent. The two principle tests of insolvency are defined in our “Jargon Buster” section.
All company directors (and that may include shadow directors and other officers) should always be aware of the quite onerous responsibilities they face under company and insolvency law. One of these is to monitor on a routine basis the financial performance and position of their companies. The Companies Act imposes a duty on directors to keep accounting records which produce a "reasonably accurate" picture of the company's financial position "at any time". Therefore not only should directors be aware of the financial position at any time but also know that the information they are looking at is accurate. As a result it is not an adequate defence to say that you did not know the company was in such difficulties.
It is vital both for the prospects of the businesses future and to protect themselves that directors seek appropriate assistance as soon as they believe that they may be entering into difficulties. The earlier that directors act often the more successful and more palatable the outcome. Leave it too late and there may not be a solution to be found and all may be lost.
Our extensive experience in financial management issues together with a comprehensive knowledge of the rescue procedures available enable us to work with and save many businesses which might otherwise have failed. We believe that achieving a solid turnaround of a business is a team effort between the companys management, staff and external advisors. It also often takes many different external skills to put a turnaround process in place, and hence we work closely with many other professionals in this area. In particular we have a close affiliation with KSA a specialist firm of Turnaround Practitioners who are one of the leading firms in the UK.
If you would like to learn more please complete
our enquiry form.