Many companies been impacted by Covid-19, not only financially but also in the way they have done business. They may have had to restructure their teams, restructure where they do business and over what channels. Many companies have moved their services online.
However, this is all set to change. A roadmap has now been announced, with things expected to go back to ‘normal’ in the UK as of 21 June 2021. This brings many questions…what will happen for businesses? As financial support packages come to an end, will businesses be able to survive? Or will it lead many to collapse? How much time will businesses be viable for? Remember, everything is going to be different…business in this new world will be something we all have to adapt and prepare for.
The main challenge to occur is surrounding cash flow. Will companies be able to generate enough income, to cover its outcome. There will be little to no more help from the Government – think about the Government helping with Furlough. When Furlough ends, it is up to the employer to pay the wages. Can this be covered? A prediction is that economic climate post-Covid will be tough with less spending by consumers who are trying to hold onto all the income they get, with risk of job losses or company closure. Also, for those in the community who remain fearful of going out and mixing, their disposable pennies stay at home.
So, what can be done?
Even in stressful times like this, there are things that can be done and put in place to assist directors with enhancing cash flow.
There are two options:
- Reduce the amount going out by making some employees redundant, relocating premises to somewhere cheaper, leasing machinery etc.
- Increase the money coming in by increasing sales, seeking alternative finance, chasing late payments etc.
Ultimately the option goes by the heading of a ‘company restructure’. This is when a company makes changes to its financial, legal, operational and/or other compositions, to become more efficient and viable.
It tends to happen when a company faces difficulty financially and may be needed when undergoing an insolvency process i.e. administration. However, it can also occur for businesses free from distress. A change may have been highlighted and needed based on general market forces, for example in light of troubles and challenges brought on from Covid-19, or perhaps a change of ownership or a new competitor.
A restructuring/turnaround expert, like ourselves, is brought in to work with the company in need, and ensure the process runs well with the best possible outcome for the stakeholders and company itself.
Benefits of a company restructure?
- Ensures the company is up-to-date with the market and its present and future situation
- Keeps you ahead of competitors
- Change can be good!
- Better to start now before things get worse
- Could be a way of reducing business risk
- Satisfaction of stakeholders
The outcome of a restructure is a company ready for the future, revised, fresh and operating with increased resilience. The current market state and economic conditions are accounted for, and the company has greater understanding of how to play in its market and succeed.
Company restructures following Covid-19?
It is highly likely that with the amount of change businesses face currently, with Covid-19 present, and following the ‘new normal’ which we must adapt to following the slight-but-not-whole-extinction of Covid-19, restructurings are inevitable.
Think about the changes; what new health and safety policies and procedures will need implementing? Will the office/workplace need rearranging to be social-distance friendly? How will you return to cover employees wages? Have you lost a party of your supply chain in the process? Is it time to pay back the emergency loans borrowed?
What options are available?
Company restructuring covers many areas with some of the most common listed below:
- Streamlining and simplifying the business to focus on those areas most profitable: what areas, resources, departments are non-performing?
- Strategic alliance: could you make an agreement with some other entities, collaborating to achieve objectives whilst acting independently?
- Takeover or acquisition
- New technologies: could these be a worth investment to make your business more efficient and cut costs in the long run?
- Debt financing: money raised by debts being sold to investors. The borrowed money will have to be rapid with interest i.e. loans
- Relocating operations or reorganizing functions
Why not get in touch with us today? We have twenty years of experience in dealing with clients and assisting in restructuring situations. There is no better time than now to start! Contact us on 0800 970 0539.
Categories: Insolvency process