Causes of financial distress can be internal – like underquoted contractual commitments – or external – for instance, changes to the demand or supply side of a business resulting from changed economic circumstances, such as COVID-19. In many cases, it is a combination of both.
Financial distress is best understood not as being a singular state but, rather, a wide spectrum: from inability to pay statutory liabilities (BAS payments) on time to inability to pay wages – and everything in between. Where a business sits on the spectrum impacts its ability to restructure its affairs. Generally speaking, earlier intervention offers a broader suite of options.
Business restructuring and turnaround initiatives available are unique to the circumstances of each business, but can generally be classified under three distinct streams:
- Strategic initiatives (e.g. pivoting to new markets, divesting or acquiring business units)
- Operational initiatives (e.g. modifying key performance drivers, such as customer pricing, employee remuneration/incentives, overhead reviews)
- Financial initiatives (e.g. restructuring debt repayment profiles and, in certain cases, compromising debt either formally or informally)
Assuming responsibility for formulating and executing a business restructure or turnaround strategy can be challenging for management, particularly if resources are already stretched dealing with the day-to-day operations and obligations of the business.
Grant Thornton’s restructuring and turnaround team works closely with key stakeholders – including owners, managers and lenders – to quickly identify and resolve issues affecting profitability, protect enterprise value and recover value. We’ve successfully managed restructuring and turnaround projects across a variety of industries in time-critical situations and have a strong track record of helping mid-sized businesses and organisations build sustainable platforms for growth.
At an early stage, we develop a re-organisation plan to drive successful outcomes for our clients, including a financial, operational and strategic analysis and a management team assessment. Our goal is to get businesses and organisations back on track and put them on the course to future growth.
We also provide lender support services to major banks, private equity specialist financiers and international financial institutions.
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