Recession-Beating Company Recovery
Despite the pain that recessions cause, with a clear head:
- Problems can be mitigated.
- Recessionary opportunities can be taken.
Recessions cause difficulties for almost every business, often pushing even a good company or corporation towards insolvency and bankruptcy.
The biggest management problem during a recession is not sales, cash-flow, or credit; it is denial. "Maybe wrongly we just felt proud that we were surviving", Simon Berwin of Berwin & Berwin. Denial, and "juggling the finances", is a recipe for a downward spiral and insolvency. Cash is haemorrhaged each week and options for business recovery are squandered. Most Chief Executives do it; we are, of course, all human, and successful people are buoyed up by strong optimism and self belief. Rather than going to a company doctor with a specialism in turnaround, too many executives drive their business to the corporate mortuary. Berwin & Berwin found that with profits squeezed, they could no longer invest in new machinery and they would die of attrition. Fortunately they recognised the problem in time, took radical measures, and have been expanding since.
The key to recovery is:
- Recognising this situation.
- Bringing in the objectivity of a specialist turnaround executive.
- Backing a sound business rescue plan.
Most UK Managing Directors don't use the services of a recognised turnaround practitioner, many aren't even aware of the profession. As you are reading this, your are smarter than most. Our fees tend to be lower than those of an Insolvency Practitioner, and by law, Insolvency Practitioners have to act in the best interests of your creditors, which may not align with your best interests. Both are good reasons to come to us first, and better still, if you engage us early enough, you may never need to go to an Insolvency Practitioner.
A company rescue plan may include protection from creditors (a "CVA") as well as a set of actions to reshape the enterprise into a recession viable business. A business following such a plan can not only recover, but emerge from the recession stronger than the competition, and be able to take a more dominant role in its industry thereafter.
Some companies continue to expand during recessions by judicious management. Specialist private equity investment funding may be available for acquiring struggling competitors, suppliers, or businesses with related products or services, to allow a stronger business to be formed through merger. Such a merged business could benefit from rationalisation (lower overheads), supply chain efficiency, or cross selling to an enlarged customer base.
Those familiar with share and commodity trading will recognise that money is made by buying and selling at the right points during fluctuations. The sometimes rapid fluctuations during recessions enable some astute directors, supported by fleet-footed interim managers, to profit from these changes.
Allow a business doctor to help you unearth a recession beating strategy for your company. As you've read this far, this is the service for you; don't let more time and cash slip away. Now is the time to make that strategic move; clicking on the Contact button may be this year's best business decision.
If you think that things have gone too far, and insolvency is inevitable, we may be able to organise a PrePack rescue with the Insolvency Practitioner and funding from an external investor (funds are currently available from our associates). Time will be of the essence. Click the Contact button to get in touch immediately.
Okay, so you didn't use our Turnaround service; most UK director's don't. When a company falls into the hands of the administrator or receiver, it may feel that the vultures are circling, all hoping for a slice of the assets.
Often a "trade purchaser", a company from the same or related industry, perhaps a former competitor, will buy the business or the major assets.
In the absence of a suitable trade bid, and providing there is a fundamentally sound business, product, or service within the insolvent company, all is not lost. A Private Equity house may purchase the enterprise and use our skills alongside key staff from the company to resurrect the business.
We are always interested in suitable resurrection prospects, whether it is your company or someone else's. In such a case, we'll work with key staff to produce a Resurrection Plan, and use our Private Equity contacts to entice the necessary investment. Contact us today.