Turnaround

We will carry out a critical evaluation of your current business strategy, your markets, competition, products or services, organisation and management. We will help you identify areas where operational performance can be sustainably improved, through specific initiatives and provide implementation support, with a view to improving profitability and cash generation.

Performance Improvement Case study

As part of a broader restructuring of a large conglomerate, we recommended that the soft drinks bottling business which was the main cash generator, but with declining performance, needed to improve its operating performance. We formed and led a management task force with the remit to identify and implement operational improvements, which included:

• Sales force rationalisation and revised compensation system.
• Centralisation of cash control.
• Elimination of excess capacity through plant closures.
• Product line and format rationalisation.
• Investment in new bottles and display cabinets.
• Introduction of major new product.
• Streamlining of logistics infrastructure.
• Within 18 months, the operating result and cash flow of the business had been increased by 50% on a sustainable basis.

Being able to identify when pinch-points will occur and to quantify funding requirements with sufficient advance warning is a must for any business. If your business shows any of the following symptoms, we can advise and assist you to obtain important improvements:

• Accounts receivable increasing in terms of days’ sales.
• Suppliers pressing for improved credit terms.
• Inventories growing in terms of days’ production, but stock-outs are increasing.
• Operating units sitting on cash buffers.
• Lenders exerting pressure to reduce overdraft facilities.
• We have a proven track record of generating liquidity in adverse conditions.

Cash and Working Capital Case study

We were engaged by the management of a private hospital group, at the behest of the Group’s main lenders, to determine what improvements could be achieved in the overall working capital situation and to assist in the implementation of the necessary measures.

The Group had trapped cash, resulting from the complexity of accounts receivable management, with average balances outstanding of more than 110 days’ sales. In addition, there were weaknesses in the billing system, matching of outstanding items and collections, receivables management and internal processes.

We identified the critical improvements required in billings and collections matching procedures. We assisted with collections management, follow-up of outstanding balances, the preparation of ageing analyses, valuation and estimation of provisions, benchmarking of commercial terms and the improvement of links between the IT department and operating units.

In addition, we ran training programmes on portfolio management, the collections cycle and action plans at hospital and Group level.

We achieved an £8 million reduction in accounts receivable and reduced days sales outstanding by 6 days. We also created an awareness of the need for best practice in the rapid, accurate billing and collection of clinical services, as well as implementing necessary systems improvements.

• Strained relationships with the company’s bankers.
• Cash pressures or a shortfall in liquidity.
• Possibility of exceeding borrowing limits.
• Actual or foreseeable breach of financial covenants.
• Debt level too high compared to ability to generate cash.
• Impending facility renewal against a background of deteriorating business performance and/or difficult credit market conditions.

We work with both corporates and lenders in businesses which are facing financial and/or operational under-performance to provide restructuring solutions which are tailored to the circumstances of the debtor company.

We advise companies on cash flow management, contingency planning, financial projections, business plan preparation or review, restructuring proposals and business reorganisation.

Financial Restructuring Case study

We were engaged by the shareholder and management of a £70 million turnover tissue paper manufacturer to advise and assist in the restructuring of its £29 million bank debt. Only one year before, management, advised by an investment bank, had negotiated a restructuring of the debt. However, the company was significantly underperforming compared to plan and was having difficulties in complying with the agreed facility terms.

We assessed the company’s strategic plan, principally in relation to new export markets and products. We built an integrated 7-year financial model which included detailed production modelling and advised and assisted management in the development of a revised business plan.

We obtained the lenders’ agreement to the business plan and, subsequently, drew up a restructuring proposal, leading negotiations with the lenders. In addition, we reviewed all the financial aspects of the legal documentation relating to the restructuring agreement.

The restructuring was successfully concluded on favourable terms, enabling the company to carry out operational improvements designed to enhance profitability and cash flow on a sustainable basis.

An IBR has the following key features:

• Identifies the key challenges and issues facing the business.
• Determines the drivers of recent underperformance.
• Analyses underlying strengths and the reliability of management’s plans and expectations.
• Challenges key forecast assumptions to obtain a clear view on future financial prospects.
• Links strategic goals, operational initiatives and financial performance.
• Identifies and quantifies controllable and uncontrollable sensitivities.
• Flags up risks and mitigating actions.
• Proposes and quantifies available options.

We can help you by providing a clear view of the current position of the business, from both financial and operational viewpoints, and of its short and long-term prospects. This will enable a rebuilding of trust, leading to a speedier recovery.

Independent Business Reviews Case Study

On behalf of the bank syndicate, we were requested to review the operations of a major electrical power distributor. Following its acquisition by a leading European utility, the company had invested significantly in modernising and upgrading the distribution infrastructure, with a significant proportion of the investment being funded in foreign-currency.

In addition, a number of major operating issues, including revenue assurance and cost rationalisation, needed to be addressed. Regulated prices and foreign-currency debt service had caused difficulties in meeting debt service obligations.

The company had a highly-sophisticated planning and financial model. We reviewed and challenged the main assumptions in the business plan, particularly in relation to revenue enhancement measures and rationalisation of operating costs.

We reviewed cash flow projections, cash management and contingency planning measures. Of significant importance was the review of capital expenditure plans, particularly, in relation to the ongoing upgrading and modernisation of the distribution network. We built a flexible capital structure model, which enabled simulations to accommodate the impact of performance sensitivities.

We provided advice to the lenders throughout the restructuring negotiations.

Our interim managers work with current management, stabilising the business, managing critical stakeholder relationships and constructing a solid foundation for future activities.

We have a network of experienced interim managers and turnaround professionals who can step into management roles, including Non-Executive Directors, Chairmen, CEOs, Finance Directors, Human Resources, Operations and Commercial Directors.

We help to restore stakeholder confidence through providing the business with the appropriate, unbiased experience and skill sets. In this way, we help our client management teams move forward and focus on developing the business.

Interim Management Case study

London 2012 Ceremonies Limited (L2012C) was the company that delivered the opening and closing ceremonies for the 2012 London Olympic and Paralympic Games over a 3-month period.

The L2012C team managed a fully-integrated project, from initial creative concept and design, through technical feasibility and design, construction, testing and rehearsal and final staging. Dismantling and environmentally-friendly disposal of all residual assets was an additional key element, leading to an orderly wind-down and liquidation of the company.

A senior member of our team was brought in as an interim replacement for the incumbent Finance and Commercial Director of the company, who had left shortly before the staging of the Olympic opening ceremony. The role required immediate familiarisation with the current status of the four main project streams, the level of completion and the investment necessary to complete. It also required getting to grips with all financial and accounting processes and ensuring control over the main transaction cycles.

Responsibilities included financial and management reporting, budgeting and forecasting, accounting, project cost control, procurement, accounts payable, treasury, human resources, payroll, insurance and asset management.

The project was delivered within budget and the company has been wound down in an orderly manner, all assets disposed of with no or minimal environmental impact and final solvent liquidation is imminent.