Case Study: Turnaround Management & Restructuring

Stock-listed wholesaler

An increasing shakeout among commercial customers along with an increasing number of discounters has changed the customer structure and thus led to eroding the sales numbers of the traditional company. Moreover, the eastwards expansion had been funded from the cash flow and never led to a backflow, other cash cows evolved into cash-burners.

After a decade of constantly decreasing revenue the profit was negative, the equity thin and the financial possibilities in a very tense situation. A constant shortfall of the budget targets triggered a loss of confidence among banks and the necessary bridge financing was not approved.

Facing high risk of bankruptcy, an external restructuring task force was set up and all resources were located to following areas:

1. Inventory management
2. Receivables Management
3. Liabilities Management

Within 4 weeks sufficient liquidity has been created to ensure the survival of the next 6 months. This success in generating liquidity and a challenging restructuring plan drawn up in parallel convinced the banks to grant the needed bridge-financing, subject to fulfilling the undertaken commitment to implement all defined measures, as there were adapting the cost structure and aligning the strategy with the market needs.

Despite a permanent revenue loss due to a dwindling market, a cost structure could be implemented, which led the company to profitability. With the launch of an M & A process and all necessary steps regarding data preparation a new investor entered and the project was completed.