Turnaround involves the restructure of a financially challenged company with or without the use of a formal insolvency procedure. This is only relevant for companies that have a viable business that can, if freed from debt, trade profitably.
The ‘Turnaround’ culture for financially distressed companies now firmly exists. It is being embraced by financial institutions as well as the accounting and insolvency professions and is particularly good news for entrepreneurs and risk takers who are so vital in industry.
What is a business Turnaround?
It can simply involve an informal workout with a key group of creditors but is more likely to include a detailed appraisal of the company’s trading operation and the implementation of a programme to ensure the company survives and returns to profitable trading. A well structured turnaround programme can avoid formal insolvency.
The key elements to a turnaround programme include:
- Assessment of the business to ascertain whether it is viable;
- Identification of areas for restructuring and development of a programme for the implementation of changes required. This alone may not be sufficient to ensure the company can move to a positive trading position.
- Address cashflow problems by introduction of new/additional sources of funding. Funding options include debt, stock, asset finance as well as general and equity finance. Half the battle is knowing who to talk to;
- Management of turnaround programme. The company’s management team is likely to need support in the early stages of implementation. Part of the programme may require changes in the structure of the management team.
We offer an initial free consultation on the various options that may be available to the company. If turnaround is appropriate, we will provide an estimate of our costs for carrying out a viability review and assisting with the drafting and implementation of the turnaround plan.
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