Why the causes matter more than the symptoms
A liquidity shortfall is rarely the cause of a crisis, but usually its visible result. Whoever treats only the symptom, for instance by extending the credit line, merely postpones the problem. A restructuring only becomes sustainable when the causes are identified and addressed.
Typical causes are an outdated range of services, an excessively high fixed cost base, unclear responsibilities, dependence on individual customers, inadequate costing or shortcomings in receivables management. Several causes frequently act together.
How we prepare the situation assessment
We evaluate annual financial statements, BWA (betriebswirtschaftliche Auswertungen – management accounts), open items lists, order backlogs and cost calculations. In addition, we hold discussions with management and, where appropriate, with executives from sales, purchasing and production. In this way we combine the picture presented by the figures with the view of those who know the day-to-day business.
The result is a concise presentation of the economic situation: earnings position, net assets and financial position, market and competitive position, and the organisational condition of the business.
- Analysis of revenue, gross profit and result by product, customer and division
- Examination of the cost structure and its development
- Review of receivables, inventories and liabilities
- Classification of the crisis stage
- Identification of the principal causes of the crisis
An independent view from outside
In a crisis, owners and managing directors are under considerable pressure and are often themselves part of how it came about. An external view helps to question assumptions and to formulate uncomfortable findings objectively. In doing so, we see ourselves not as a judge but as a partner who creates clarity.
The situation assessment also serves as the basis for meetings with banks, suppliers and shareholders. Comprehensibly prepared findings create trust and show that management is taking the situation seriously.
Result and next steps
At the end of the analysis you receive a written summary with the principal findings, the classification of the crisis stage and an initial assessment of the fields of action. We discuss the result with you in detail and jointly determine which steps are to follow.
If the situation assessment reveals strained liquidity, securing liquidity takes first priority. Once solvency is secured, work on the restructuring concept can begin immediately.
Frequently asked questions
Which documents do you need for the situation assessment?
As a rule, the most recent annual financial statements, current BWA (betriebswirtschaftliche Auswertungen – management accounts) with trial balance, open items lists, loan agreements as well as order and personnel overviews. We prepare any missing documents together.
Is the situation assessment an expert report?
No. It is a business analysis serving as a working basis. A formal restructuring report is prepared by experts qualified for this purpose.
Will my employees be involved?
Only in consultation with you. You decide who is informed and interviewed, and when.