Turning around Financial Constraints

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.