Case Study: Turnaround Management & Restructuring

Medium-sized chemical manufacturer

A year-long buy-and-build strategy created a conglomerate of companies that achieved no synergies. High bank debts and a negative cash flow nearly led to bankruptcy.

In this situation, the new business plan requested by the banks determined that the restructuring of the group was possible and thus eligible for bridge financing.

By taking over the responsibility of restructuring along with a general power of attorney we started with a variety of quick measures. To ensure liquidity, tough measures were introduced in the area of debt management, as well as in the manufacturing process. The production steps were adapted with the result that the processing time could be reduced significant. Furthermore, the serial production was switched to commissioned production and the inventory control system adjusted accordingly. In the purchase department the actions were limited, as the group was already working heavily with supplier credits. The credibility was diminished by disobeying payment agreements in the past.

Subsequently, subsidiaries and branches were sold (management buyout) or closed, non-core assets were sold and headcount and costs cut down to a minimum. This was made possible by reducing the product portfolio widely down to high margin products.

All this led to a return into profits area and created sufficient liquidity. After 10 months the project was completed from restructuring point of view, but various strategic measures are still in phase of implementation.