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M&A: Merger Integration

M&A: Divestitures, Spins

Restructuring/Turnaround

Operational Improvement

About

 
 
Turnaround & Restructuring
Are you managing distress or vice-versa?
‘The powers that modern lenders wield rival in importance the hostile takeover in disciplining poor or under performing managers… When a business enters financial distress, the major decisions—whether the CEO should go, whether the business should search for a suitor, whether the corporation should file for Chapter 11—require the blessing of the banks' (Baird and Rasmussen, "Private Debt and the Missing Lever of Corporate Finance")

  
Activities
Description
Business Plan: Review of management’s forecasts and valuation  Bottom up financial forecast and feasibility of growth and market projections, add-backs, capital expenditures
Reasonableness of sources and uses of cash
Valuation to support loan covenant implementation and other negotiations
Loan-covenant metrics Design and evaluation of impacts of metrics and coverage ratios
Recommendations for actions in case of violations
Short-term cash projections Review short-term liquidity needs, develop operations-based rolling cash forecast ("13-week cash flow")
Overview cash management system and process (deposits, investment, disbursement) 
Analyze receivables and the efficiency of the collections process
Long-term liquidity Review capital expenditure and divestiture/acquisition plans
Review management’s valuations in light of the stated strategy
Evaluate alternative sources of liquidity (divestitures, asset sales, equity placements)
Identification of collateral options Identify valuable assets, sources of cash
Determine feasibility and/or structure of collateralizing assets
Decision and negotiation support Framing decisions in light of developments along the way to maximize outcome
Determining negotiable items and framing discussions with suitors, management

 

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