When owner managers of businesses experience persistent financial difficulties they often believe that insolvency may be the unavoidable outcome. The reality is that this is not the case.
It’s a familiar story – cash flow has dried up or liabilities exceed assets. The bank manager calls to discuss viability. It’s naturally assumed that funders have a business’ best interests at heart. However, in reality, funders protect their own interests when presented with a risky situation that they are being asked to consider. In a recent technology business I was involved with, financial difficulties led to the funder calling in an administrator, but this was premature – the business could have marketed its intangible assets, which included its patents, instead of insolvency. A better outcome for creditors and the incumbent management team could have been achieved.
Engaging a specialist adviser to advise management during the process and not relying on the funder or their own advisers exclusively can unlock innovative solutions that are more holistic and wide-ranging. A turnaround specialist will conduct a full assessment of the business and provide definitive and clear advice.
It’s never too late to engage the services of a turnaround specialist, the earlier they are contacted, the better. Recently, I was engaged by a business on the day before they were to be entered into administration. I was able to liaise with the administrator and engineer a deal for the management to make an offer to purchase the assets from the administrator. I know that if I was contacted much earlier, when the initial problems became apparent, then I could have secured a better outcome overall.
If you and your business require turnaround help please contact Andrew Cawkwell on 0191 211 7957.