A tough economic climate, rapid market changes, new competitors, disruptive technologies, strategic errors—any or all of these can plunge a company into serious financial distress. Left unaddressed, they may threaten corporate survival. Whether these factors occur in isolation or converge, they typically trigger a host of problems, including underperformance, declining earnings, and liquidity and cash-flow blockages. Companies often exhibit symptoms of distress well before a crisis erupts. In many cases, a downward spiral is not inevitable. It can be arrested and reversed. Early detection and swift, decisive action are the keys to restoring performance and value. That's why timely, professional advice is critical.
When a company is underperforming, is in distress, or is in crisis, our first step is to undertake a tailored, objective assessment of the situation and resources. Our rapid and rigorous review process scrutinizes financial performance, operating dynamics, asset deployment, and management issues—and then identifies a range of options.
When a company experiences cash flow difficulties, relationships with lenders and suppliers often become strained. We assist companies in dealing with the demands of their lenders by assisting in the preparation and presentation of information and coordinating or negotiating a debt restructuring agreement. This allows management to focus on running the business and making operational improvements.
Lenders and other stakeholders need to understand the position of their business and be persuaded that its prospects are sufficiently attractive for continuing their support. Working with independent external financial advisors is often essential for the debt restructuring process to succeed - particularly where multiple lenders are involved.
For companies under pressure from issues of profitability or cash flow, selling the business or assets may prove to be the most feasible option for raising funds to repay debt. Selling the business or assets voluntarily will typically result in a higher level of realization than a sale under duress. PricewaterhouseCoopers can act as a lead advisor to prepare a business for sale, then advise and run the sales process on behalf of the company. To facilitate a successful sale, clear guidelines should be established for the timeframe and outcome of the sale process.
Any restructuring or turnaround usually involves operational restructuring. We can assist in developing a plan to make improvements to the company from an operational point of view and, consequently, free up additional cash to support the business and service debt. Such measures may include working capital management, overhead reduction, cost cutting and improving efficiency. We thoroughly assess all turnaround options. We work with management, creditors and other stakeholders to develop an action plan and organize the resources required for effectively implementing this plan.