Clients need a restructuring or turnaround as often they are in financial distress – with cash flows declining, losses mounting and negative EBITDA.  

Financial distress is however simply a signal or symptom of several underlying causes.

The top 10 reasons a company needs a restructure or turnaround are also the reasons most businesses fail. Those reasons are below:

Top 10 reasons why businesses everywhere fail or undergo financial distress

1.     Not enough demand for a product/service.

2.     Rigid owners.

3.     Out of control growth.

4.     Poor accounting.

5.     Lack of a cash cushion.

6.     Operational mediocrity.

7.     Operational inefficiencies.

8.     Dysfunctional management.

9.     Lack of a succession plan.

10.  A declining market.

When faced with financial distress or when you have taken over a portfolio company and would like to rationalize its operations, we assist you in some of the following ways:

• Deep dive sessions with shareholders and executives to understand the challenges

• New management appointments and staff restructuring. Companies typically fail due to lack of good management and so this service often involves staff changes.

• Priority area identification. We then develop a strategic plan for identified priority areas to right the ship and then execute.

• Regular reporting. We will often put in place a number of new reporting tools and templates to provide regular reports to the shareholders, board and/or other key stakeholders. This includes keeping staff abreast with changes as restructuring and turnaround can bring anxiety and unease to all.

Terry Ingram and assisted by Dickson Wasake the team leads for this service together with the rest of the team of IAG deliver on this service starting with detailed meetings with the private equity or other shareholders/board members to understand the issues and then identify the priority areas.

We often prefer to "receive the keys" - meaning we execute the turnaround as we deem fit as often this requires moving fast and nimbly and thus we need as much flexibility as possible - albeit we will report periodically to the appointing authority.

These engagements to be most effective are 9 - 12 months, albeit a rapid turnaround can be executed in about 3-4 months.