McDonald Vague has considerable experience in advising companies in financial difficulty, and their lenders, on the options available to them. This work usually falls "below the radar", and due to its confidential nature, our role is generally only known about by the company's directors and/or lenders. We have assisted behind the scenes in numerous situations where a potential failure of the company has been avoided.
When dealing with a company facing financial difficulties we undertake an analysis of the business to assess whether we can restructure it or turn it around. Our policy is to look for solutions that preserve value wherever possible.By undertaking a financial and strategic analysis of the company we can create an action plan that maximises the return on investment and improves business performance. The analysis we undertake involves:
This includes assessing operational and financial issues, cashflow, working capital management, forecasts, ROI, management and overall strategy.
2. Determining the options
We identify key options to address or minimise the operational and financial pressures faced by the company. These may include some or all of the following:-
- assessing whether further sales growth is achievable
- identifying cashflow/working capital weaknesses and possible solutions
- reviewing overall profitability and suggesting how this may be improved
- reviewing the appropriateness of the company's funding structure (eg long-term debt versus overdraft funding)
- considering whether some form of refinancing is needed
- identifying areas for improvement in management and overall strategy
- reviewing the company's costs structure and identifying areas of waste or excessive cost
- assessing whether less profitable or non-core divisions can be sold (or should simply be closed)
- identifying any other capital assets which can be sold
3. Assessing the options and priorities
We then assess the likely outcomes and success of each of our options in Step 2, looking at the impacts and the risks, and working with stakeholders to determine the level of support they have for each option.
4. Creating an action plan
We agree an action plan with the key stakeholders, ensuring they are aware of the expected timeframes, results and responsibilities in the plan. We will then assist with implementation to whatever extent the client considers necessary.
5. Monitoring an action plan
We regularly review the process against the various actions and timeframes, providing reporting to key stakeholders throughout the process.The vital ingredient for any successful restructure or turnaround is that the parties involved contact us quickly, with an open mind and a desire to solve the problem. We are frequently able to assist companies in maximising value and minimising potential losses to creditors through this process.
The nature of this work is such that the options are very broad and each assignment is treated differently, based on the specific issues the business is facing. There is no standardised 'template' approach.We have experience of dealing with businesses in virtually every sector. Some fields we have had significant exposure to are construction, hospitality, agriculture and viticulture, finance and retail.
As a medium-sized specialist firm we are able to respond quickly, are less risk averse and have a lower fee structure than most larger firms. We don't have the overhead costs and inflexibility of a large corporate but we are not so small that we lack the resources and the credibility to bring about change. We are also much less likely to face conflicts of interest than larger, multi-disciplinary firms.
Our team is diverse and comes from a range of backgrounds including:-
- Chartered accountancy
- Rural experts
- Property lending
- New Zealand Police
- New Zealand Army
- Serious Fraud Office