In the executive floors of German companies, the mood has been better. It feels like one crisis is followed by another. But restructuring expert Britta Hübner is certain: You have to see the crisis as an opportunity.
When companies start to falter, when companies are on the brink of collapse, they often need to be revived. Then comes the rehabilitation phase. In plain language: Many cases are actually close to insolvency and have to be resuscitated. An appropriate phase of solid restructuring and transformation is crucial.
But you shouldn’t throw in the towel right away. Many companies have a potential that should not be underestimated, especially above a certain size. You have to look closely at their position in the market. Redevelopment is only possible with the market.
Britta Hübner specializes in overcoming corporate crises. It helps with long-term and sustainable restructuring and further development.
We know pretty well which steps are necessary in a renovation. The question is why they are often not made. The problems are also the same. The costs are often too high, the liquidity too low, the banks’ trust in the management or in the shareholders has been shaken and the performance towards new investors or buyers is too bad.
You have to analyze these areas step by step and develop solutions. In most cases, complex financing structures are involved. That’s what makes it exciting. It would of course be desirable if companies focused more on liquidity than on earnings. Because, in my experience, if you have cash, you usually have results, but not necessarily the other way around. Solid liquidity planning is a reliable early warning system and can mitigate or perhaps even prevent a crisis.
The legislature has now created many judicial and extrajudicial restructuring instruments. But who can draw up a restructuring plan that convinces the creditors if you don’t have a reliable overview of income and expenses. In “normal” business operations, regardless of a crisis, this must be the task of the management. The company must do its part to reduce the need for fresh money. If you don’t do your homework here, you’ll go under quickly, even if there’s only a small “water ingress”.
When the crisis hits, of course, it’s all about money again. Nor can one expect the banks to let everything continue blindly and in good faith. Restructuring also means refinancing. All registers have to be pulled out here: liquidity management, working capital management, debt restructuring. Specialist knowledge is required here, and new horizons can be opened up for management. But not only for the management.
Remediation experts are accountable to all stakeholders. This includes the workforce and, above all, the financiers, without whom a restructuring is usually not feasible anyway. Many regard the financiers as the villains in the restructuring, but forget that the shareholders are often not able to support the company and the necessary funds for the restructuring can only come from the financiers.
The demands on the banks themselves are also increasing. With the EU requirement for financing sustainable growth, the issue of sustainability has increasingly found its way into financial investment management. However, there is no uniform definition of sustainability. There are also no standards or legal requirements for this.
One would like to strengthen the pillars of environment, social and governance. That is why one also speaks of the ESG rating that one has to fulfill. It means all or nothing. The banks demand health care plans for employees or measures for IT security or plans for the case of resource shortages or a whistleblower program against corruption as they see fit. If you only start when the crisis is here, you will be too late. Family-run medium-sized companies often do not have such things on their radar. For years, people have been clinging to the economic criteria of profitability, liquidity and risk and have simply slept through the turning point.
The state doesn’t always have that in mind. After Corona and the current crises, there seems to be a lack of trust in natural market regulation. The state provided support very quickly and unbureaucratically during the pandemic. Many companies have taken advantage of this. Most certainly right.
But there is also a number of companies that should not be underestimated that were basically in need of restructuring even before the pandemic and only survived thanks to the support measures.
It is essential to understand and solve the financing situation. The restructuring of a company in crisis is one of the greatest challenges for managing directors or board members.
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