Independent business review
Where businesses are underperforming, in distress, or in crisis, we provide tailored business review services either for financial stakeholders or for the business itself. We offer output in the form of objective analysis that evaluates the fundamental viability of the company and serves as a platform for finding solutions among stakeholders (lenders, management, shareholders, etc.).
- Reviewing the historical and forecasted performance of the business
- Reviewing the current financial position and short-term liquidity forecast
- Helping the company identify and quantify reasons for its underperformance
- Providing lenders with a transparent view of the company’s situation
- Setting out potential options available to stakeholders
- Determining prerequisites for the long-term viability of the business under prevailing market conditions
Assuming that the company knows the causes of decline in performance or crisis, it can react by preparing and subsequently adopting the necessary measures. We assist companies in designing and implementing a plan of restructuring measures in the strategic, operational and financial area. We proceed systematically to help clients stabilise the situation in the short term, thereby creating prerequisites for the preparation of medium- and long-term measures aimed at restoring the company's value.
Identification and implementation of strategic measures -> Leading the Company in the right direction
- Enhancing business strategy (expansion of sales channels, product lines, market coverage, etc.)
- Enhancing business functions
- Rationalising product portfolio
- Marketing analysis
- Optimisation of the corporate structure (e.g. merger/liquidation of subsidiaries), including optimisation from a tax perspective in cooperation with our tax department
- Divestment of non-operating assets
- Resetting of internal processes (centralizing sales and purchasing functions etc.)
Identification and implementation of operational measures -> Profitability and Liquidity Improvement
- Profitability analysis by product categories, services, sites, etc.
- Sustainable costs reduction
- Optimisation of operating capacity
- Liquidity and working capital improvement
- Implementation of a key performance indicators system
Designing a concept of financial restructuring as well as support during negotiations related thereto -> Capital Structure Stabilisation
- Detail in the Financial restructuring section
Working capital optimisation
In times of liquidity crisis, we are ready to assist management to propose, manage and implement so-called “quick wins” in releasing funds tied to working capital. We have extensive experience in optimising and managing working capital across multiple industries.
- Release of tied resources from individual components of working capital – “cash conversion cycle”
- Preparation of a comparative analysis of the company’s working capital parameters vis-à-vis a group of similar companies and identification of opportunities for improvement ("benchmarking")
- Performing a diagnostic review to identify “quick wins” and longer-term working capital improvement opportunities
- Implementation of long-term measures to improve liquidity
Assuming that the company knows the causes of its decline in performance or the crisis, it can react by preparing and subsequently adopting the necessary measures. If the situation allows for an out-of-court solution in the form of financial restructuring, we assist companies in designing and implementing a restructuring plan.
We help the company reach alternative refinancing options for dealing with its existing debt, and we also design and implement restructuring of the balance sheet, optimise the capital structure, and obtain new financing options (e.g. in the form of off-balance sheet financing).
- Capital structure assessment
- Covenant testing, security review
- Change from bilateral to structured financing
- Negotiating better terms of financing
- Standstill negotiation
- Preparation and implementation of a restructuring strategy
- Assistance in preparing a business plan and future outlook taking into account the proposed restructuring options
- Proposing adjustments of hedging instruments that correspond to restructuring strategy chosen
- Support in securing financing, project management and communication with potential creditors
- Selection of a financing provider through tenders
- Assistance in identifying an optimal debt capacity
- Assistance in modifying the capital structure
- Support in setting the covenants
- Stakeholder analysis, tactics and managing relationships
- Providing comprehensive management of tenders, communication with applicants for funding
- Coordination of key stakeholders
- Monitoring cash flow and net income development
EFO - Estimated financial outcome
Negotiating a particular restructuring solution is often challenging, due to an informational asymmetry among individual stakeholders. Their assessment of a proposed strategy may be influenced by an inaccurate perception of their security position, which could be substantially different if put to the test of formal insolvency proceedings. An EFO thus serves as a benchmark to compare the terms of a proposed out-of-court restructuring solution with alternative in-court scenarios. The process involves performing an indicative valuation of both the business and its assets, as well as determining the potential claims among which this value would be distributed.
EFO serves as a tool for determining the impact of insolvency on (i) the value of the business if sold as a going-concern or on a piecemeal basis; (ii) the dilution of the lenders’ balance sheet claims with contingent liabilities, priority claims and other off-balance sheet items that would only crystalise in insolvency proceedings; and (iii) the ranking of entitlement to claim satisfaction under applicable jurisdictions.
- Definition of hypothetical scenarios available to the company or its creditors
- Preparation of an indicative valuation on a going-concern and asset basis, subject to the relevant scenarios and underlying viability of the business
- Estimation of potential claims that would crystalise under each scenario, taking into account jurisdiction-specific issues related to claim types and priorities
- Estimation of recovery for secured and unsecured creditors under each scenario
Complex and volatile economic environment, rapid changes on the market or new competition and technologies - all of these factors can cause financial distress. If left unaddressed they can ultimately threaten the very existence of the company. Taking into account all possible options available for a financial distress solution, a controlled insolvency process can be identified as the most appropriate under certain circumstances. At other times, insolvency may be an unplanned and unexpected event. In both cases the priority is to protect the value of the company and maximise satisfaction, which requires extensive expertise and experience with insolvency proceedings.
- Pre-packaged reorganisation and moratorium
- Countering hostile insolvency filings
- Estimated Financial Outcome
- Managing liquidity
- Support in securing credit and off-balance sheet financing
- Preparing a restructuring strategy
- Preparation and administration of property inventory as well as valuation of assets
- Preparation of a reorganisation plan
- Support in selling assets
- Preparation and implementation of the sale process of a distressed company
- Review of potentially contestable legal acts
- Preparation of materials for the creditors’ committee or the creditors' meeting
- Coordination of stakeholders (management, shareholders, creditors, insolvency trustee, other advisors)
- Interim management
- Support post-deal handover
- Support during distribution of proceeds according to schedule
- Support with post-deal integration
If you become aware that your subsidiary business, autonomous business unit facility, branch or brand is underperforming, we are able to help you recover optimal value. We work with you to identify the issues and evaluate the options available and assist in implementing the chosen approach (e.g. sell, fix and sell, or wind-down). We can also help you identify and manage the risks inherent in the process. The planned outcome will be an increase in shareholder value by selling, restructuring, closing, or winding down the underperforming business or subsidiary.
We aim to avoid the ’fire-sale’ scenario. “Fix and sell” is a preferred exit route where we combine our turnaround and disposal expertise to maximise the value of the transaction. We may even consider expanding the business by merger or acquisition if this can add to the eventual resale value.
Controlled exit - we would gradually shut down operations over an agreed upon timeframe, while finishing existing orders, selling assets and maximising the collection of receivables. Sometimes, however, the best strategy may be to terminate the company’s activities as soon as possible.
- Release capital to reinvest in the business
- Help to re-deploy resources more productively elsewhere in the business
- Maintain brand reputation and avoid adverse publicity
- Apply our proven methodology to avoid delays and obstacles typical of a divestment or disposal, thus reducing the costs and maximising recovery
PwC supports owners facing an urgent need for cash or insolvency trustees charged with selling a debtor’s estate with the distressed sale of the entire business or select assets.
- Assessment of distressed sale options
- Assistance in preparing a data room
- Valuation of the business or assets
- Identifying and addressing potential investors
- Preparation of teasers and information memoranda
- Preparation of transactional documentation
- Assistance with due-diligence and provision of information to potential buyers
- Coordination of stakeholders during the sale process
- Assistance with post-deal integration
Our services in the area of NPLs are primarily focused on the evaluation of loan portfolios and the sale of such portfolios or individual loans. We advise banks and other financial institutions on the disposal of non-performing loans. Our services include conducting financial due diligence, preparing information memoranda, asset valuations and disposal options. We identify potential investors, and facilitate sales negotiations and deal completion. For portfolio investors, we offer comprehensive advice on the buying process and detailed due-diligence of the portfolio.
NPL portfolio assessment
- Portfolio evaluation, stratification and segmentation
- Portfolio due-diligence and validation of assumptions
- Development of an optimal portfolio sale strategy
- Assess the interest of strategic and financial investors (market testing)
- Recommend further steps in the NPL portfolio value optimisation
- Implementation of the portfolio sale strategy
- Preparation of a teaser and information memorandum
- Preparation of transactional documentation
- Management of relationships with investors and support in negotiations
- Investor selection and transaction closure
Purchase of receivables
- Purchase strategy of the portfolio
- Portfolio due-diligence for potential investors
- Support with transaction negotiations
Prevention of bad debts
- Analysis and improvement of the collection process
- Setting up relevant KPIs
- Design and implementation of collection strategies