The phase in which a restructuring still costs little.
Hardly any company gets into difficulties overnight. Earnings have been declining for several quarters, the account is at its limit, a customer has been lost, the bank is asking more detailed questions. Nothing has happened yet that would need to be explained to the outside world, but the direction is no longer right.
This is the point at which a restructuring costs little and achieves a great deal. We analyse the situation, identify the causes and implement the measures with you before third parties set the pace.
What you gain
- 1You keep the initiative. Those who approach the bank themselves negotiate. Those who wait for the bank to come to them become the subject of negotiation.
- 2The measures can still be mild. The earlier countermeasures are taken, the less has to be cut.
- 3It remains confidential. No proceedings, no publicity, no notification to credit agencies.
- 4You fulfil your monitoring duty. What Section 1 of the StaRUG (the German Act on the Stabilisation and Restructuring Framework for Businesses) requires of management is produced here as documentation along the way.
- 5You know where you stand. Even if the result is that nothing more is needed, that too is information that brings relief.
The signals before it becomes visible
Crises unfold in stages, and each stage has its own signs. Those who know them gain months:
Strategy. The market changes, but the offering does not. New customers become rarer, tenders are lost, competitors are faster. Nothing is visible in the figures yet.
Sales and earnings. Revenue stagnates or falls, margins come under pressure, discounts become the norm. The result still holds, but only through one-off effects.
Liquidity. Payment terms are stretched, the overdraft facility is permanently exhausted, suppliers send reminders, taxes and social security contributions are put off at will. From this point at the latest, every week counts.
Many companies only seek help at the third stage. More can be achieved at the first or second.
First, an outside view
Brief analysis. Within a few days, a picture of the situation emerges: how are earnings and liquidity developing, where are the profit contributors and where the loss-makers, how is the financing structured, which deadlines are running. The result is an assessment of whether action is needed, and how urgently.
Causes, not symptoms. A decline in earnings is a symptom. Whether it stems from a misguided pricing strategy, a customer with too much weight, processes that cost too much or a structure that no longer fits the market determines the measure.
Measures with impact and deadline. What delivers how much, and when? We work out the measures, build them into the planning and prioritise them by how quickly they take effect: liquidity in the short term, earnings in the medium term, structure in the long term.
Implementation with us, if you wish. After the analysis, many companies know what needs to be done, but still have nobody to do it. We support implementation, if required by taking on a role for a limited period.
When third parties need to be involved
If the company’s own resources are not enough, financing partners come into play. These discussions depend less on the situation than on the preparation. A bank that sees reliable planning, clear measures and a realistic timetable behaves differently from one that hears vague optimism.
We prepare these discussions, draw up the documents and support the negotiations, from extending payment terms through deferrals and standstill agreements to adjusting credit lines and covenants.
When an out-of-court restructuring is no longer enough
Not every crisis can be resolved out of court. If the legacy burdens are so high that no realistic result can pay them off, if individual creditors are blocking or if time is running out, the more honest route is orderly proceedings, StaRUG or Eigenverwaltung (debtor-in-possession management under Sections 270 et seq. of the German Insolvency Code).
We will tell you so. An out-of-court restructuring that is bound to fail uses up the time and trust that proceedings would have needed.
