Angermann Consult supports mid-sized companies in reorganising and restructuring. The first phase consists of developing a conceptual basis for achieving financial stabilization and sustainable profitability while taking the company’s specific situation into account. This involves compiling a company review, survival forecast or fully integrated reorganisation concept. We then use this to support mid-sized companies in implementing the agreed restructuring measures.
Short-term liquidity planning - Survival forecast as per IDW S11
When a company’s liquidity becomes very tight, transparency and speedy help are key to getting the situation under control. Moreover, to be able to conduct pertinent discussions with financial partners and reduce liability risks, the company concerned will need to draw up a short-term liquidity plan that includes a survival forecast as per IDW S11.
Short-term liquidity planning in accordance with the regulations of IDW S11 facilitates a structured approach to economically assessing a company’s reasons for filing for insolvency. In addition, measures are developed to ensure financing and therefore to avoid illiquidity and resulting insolvency.
Typical Angermann Consult project approach
Stock-take of the company’s situation
- Analysis and documentation of receivables, liabilities, inventories and other liquidity drivers
- Preparation of a financial and performance analysis
- Transfer of all essential business data into a financial tool
- Development of additional evaluations and simulations which create transparency
Integrated planning and short-term liquidity planning
- Appraisal of the measures developed and transfer thereof into the plan
- Financial planning with measures to ensure that the company remains financed throughout
- Creation of 13-week liquidity planning on a weekly basis
Coordination with financial partners/stakeholders
- Binding assessment and documentation of solvency and over-indebtedness
- Preparation of a report based on the planning measures and the knowledge gathered
- Angermann Consult provides support in all the necessary negotiations with financing partners
- The report is provided and presented to the relevant stakeholders
Ongoing reporting and monitoring of measures
The survival forecast IDW S11 identifies possible reasons for insolvency (impending insolvency/overindebtedness). In addition, suitable measures are outlined to ensure the company’s financing/debt servicing capacity. Short-term liquidity planning in accordance with the regulations of IDW S11 provides the management and financing partners with a legal and conceptual basis both for the existing financing measures and for imminent credit decisions.
Independent business review
A company review provides the basis for sustainable and successful restructuring, in addition to the formal requirements of a reorganisation concept. A comprehensive analysis of the company’s initial economic situation forms an important basis. The analysis identifies weak points and derives potential for revenue growth. An integrated business plan provides an economic development forecast. In order to ensure transparency in the restructuring process, the company receives the structure of an informative report and a coordinated measure controlling system.
Four aspects are relevant when presenting the initial economic situation:
1) Revenue, finance and asset situation (of the last 3 financial years)
2) Organisation and processes
- Company and organisational structure
- Business processes
- Steering instruments / integrated IT software architecture
3) Strategic market position
- Product and service portfolio
- Customer and sales structure
- Competition structure
- Supplier structure
4) Segment income statement
- Orientated towards market development by:
- Product group
The objective of the company review is to show the way towards restructuring or further development of the company on the basis of the initial economic situation.
- Revenue and earnings planning
- Finance and cash flow planning
- Balance sheet planning
- Strategic direction
- Structural change
- Operational restructuring
Integrated reorganisation concept - IDW S6
A reorganisation concept forms the basis for the assessment of a company’s reorganisation capability. An essential component of a reorganisation concept is the guiding principle of the renovated company (i.e. its future strategic, operative and financial organisation). In this process, appropriate measures are developed with the aid of a reorganisation roadmap.
The prerequisite for reorganisation potential can be expressed in five criteria:
How high are the future market opportunities of the reorganised company?
How strong is its competitiveness in the purchasing and sales markets?
Is the financing of the company ensured, with inclusion of the identified measures?
Is the company in a position to return to a profitability which is normal in the industry within an appropriate timeframe?
Is the management willing and able to implement the necessary measures to reorganise the company?
Are there any legal or factual reasons preventing reorganisation (e.g. insolvency reasons; see also survival forecast)?
In addition, the Federal Court of Justice (BGH) has prescribed legal minimum requirements for reorganisation concepts.
These minimum requirements have been summarised by the IDW in IDW standard S6. Applying this standard therefore provides orientation and a familiar framework for all the affected company’s stakeholders and, in particular, its financing partners.
Stocktaking and position determination
- Creation of a fiscal and performance-related analysis
- Evaluations of income origins
- Normalised income, if applicable
Identification of improvement potential
- Determining the causes of the crisis
- Identifying the stage of the crisis
- Assessing the essential core processes
- Translating individual solution approaches into specific action plans
- Evaluating the measures (qualitatively and in monetary terms)
Strategy and market positioning
- Market analysis
- Competitor analysis
- Analysis of core competences
- SWOT analysis
- Strategy definition and evaluation
- Guiding principle of the reorganised company
Integrated planning and presentation
- Translation of the derived findings into an integrated plan (profit and loss, finances and balance sheet)
- Acknowledgement of the identified measures
- Binding estimation of reorganisation capability
- Report presentation for the financing partners (after approval by the company management)
A reorganisation appraisal gives the company management and its financing partners legal security concerning the ability of the company to survive and/or be reorganised, as well as its obligations according to insolvency law. It creates transparency for relevant stakeholders, identifies the causes of a crisis and reveals the potential of the company. The overarching goal is the long-term reorganisation of the company with a return to a profitability level which is normal for the sector, and secured financing. Reorganisation concepts according to IDW S6 are one of the essential prerequisites for loan decisions (loan prolongation, bridging loans, suspension of redemption and deferral, collateral release and reorganisation lending).