Enhancing Business Value Through Bankruptcy and Restructuring

Published: Jun 20, 2024
By: Shaquan Williams
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Financial advisory (FA) professionals can play a pivotal role in stabilizing and revitalizing distressed businesses in today’s challenging bankruptcy and restructuring landscape. These professionals focus on enhancing cash flow, improving operating performance, and increasing value—even in the most complex and stressful financial situations.

Key Strategies to Enhance Cash Flow During Restructuring

Maintaining liquidity is crucial for continuity. Whether a business is healthy or going through any form of transition or restructuring. FA professionals can implement immediate cash flow optimization strategies to help organizations meet their obligations and stabilize operations.

Cash Flow Forecasting Tools and Techniques

One strategy includes cash flow forecasting and management where clients receive detailed cash flow forecasting to identify potential shortfalls and surpluses. Prioritizing critical payments allows proactive management of liquidity. By improving collection processes and negotiating more aggressive payment terms with customers, advisors can help accelerate cash inflows in accounts receivable. Lastly, these professionals can conduct a comprehensive review of operational expenses to identify areas to reduce expenses without compromising essential functions. While it sounds somewhat routine, negotiating and convincing clients to work with advisors and part with their cash earlier than they anticipated is truly more art than science.

Operational Efficiency in Financially Distressed Scenarios

Operational efficiency is key to turning around a distressed business. By focusing on streamlining processes and enhancing productivity to improve operating performance, in-depth operational assessments identify inefficiencies and improvement areas. Implementing lean methodologies and process optimization techniques help businesses achieve higher productivity and lower costs. Leveraging advanced technologies, such as automation and data analytics, helps optimize various business functions, from supply chain management to customer service. Assisting in restructuring workforce roles and responsibilities to align with the company’s redefined operational goals enhances overall performance.

Debt Restructuring: A Path to Sustainable Growth

In a restructuring scenario, increasing the value of a business is crucial for attracting investors, new capital, or preparing for a potential sale. Strategies should focus on maximizing enterprise value through various initiatives that include debt restructuring and refinancing. By working with lenders to renegotiate debt terms (with the goal of reducing interest costs and/or extending payment periods) advisors can help improve the company’s financial stability and attractiveness to investors.

Asset optimization is also crucial to identify underutilized or non-core assets that can be sold or repurposed to both generate immediate cash flow and streamline operations. Developing and executing a strategic plan for recovery and growth can help the business position for long-term success and value creation.

The Role of Financial Advisory Services in Restructuring

FA professionals can bring a wealth of experience in bankruptcy and restructuring, offering comprehensive support throughout the process with crisis management services to stabilize operations and address urgent financial concerns. They can also act as intermediaries to facilitate negotiations with creditors, suppliers, and other stakeholders to achieve mutually beneficial outcomes. Furthermore, these trusted advisors can ensure compliance with all relevant regulations and provide transparent reporting to stakeholders to build trust and confidence in the restructuring process.

EisnerAmper’ s Financial Advisory Services practice group is dedicated to enhancing cash flow, improving operating performance, and increasing value in the bankruptcy and restructuring world. We can help you navigate challenges, stabilize operations, and emerge stronger and more resilient.