Turnaround & Restructuring

Achieving cost savings or risk reduction by simplifying the legal structure

Other than for making the legal entity chart easier to read, or even possible to print, why would companies try to simplify their legal entity structure? For most companies, the answer comes down to cost savings or risk reduction related, for example, to changes in the tax environment or transfer pricing, or some combination of both.

Your challenges

One unintended consequence of M&A activity in recent years has been unwieldy legal entity structures. In many large companies, the number of redundant legal entities can in fact be overwhelming. Considerable internal resources (and costs) are potentially devoted to maintaining these excess entities. Simplifying the legal entity structure can, however, be a challenging undertaking in itself. While there are obvious costs and disruption associated with entity simplification, there can also be significant benefits.

How Deloitte can help

Our combined team of legal, operational, financial and tax experts can help achieve these benefits more rapidly and in measurably larger amounts by deploying an approach that suits the client organisation best.

Our experienced team works in a hands-on manner and at close quarters with the stakeholders to:

• evaluate the current structure in terms of cost and value add
• align the legal entity structure with the business model
• assess the risk inherent in the current structure (e.g. tax and legal)
• work out a suitable transfer pricing strategy
• implement the plan without materially affecting BAU
  

Delivering a speedy exit through an accelerated sale or a wind-down and closure

Your challenges

Where the preferred option is an exit, a speedy outcome is usually preferred, and it is here that we support clients in looking for a prompt disposal. In other cases, where a sale is not possible or desirable, our wind-down and closure expertise enables us to assist in scoping, planning, and implementing a closure. A sale or a wind-down and closure will have very different implications from an operational, financial, tax, legal, real estate perspective, etc. In such a situation, shareholders will also be faced with reputational risk issues, particularly when an entire market is exited, or the industry is highly regulated.

How Deloitte can help

Our team is experienced in advising investors on the most appropriate course of action in a situation where the performance of an investment is deteriorating and/or the investor is losing control of operations. We are able to advise on the most appropriate strategy for a successful resolution of the situation to ensure the return is maximized or any loss minimized, and the client’s reputation is safeguarded. We can assist at all stages of exits as well as solvent wind-down processes. We act as liquidators in solvent wind-downs, initiating and finalising liquidations in a timely and appropriate manner, and managing the whole process from start to finish – right through to removal from the commercial register.

We have a strong blend of practical, commercial, operational, and financial skills enhanced by regulatory expertise, as well as offering full project management and implementation of our plans. We liaise with the firm's specialists in functional areas as and when this is required.

Our seasoned team works in a hands-on manner and at close quarters with the stakeholders to:

• evaluate feasible exit routes
• define the exit milestones and develop a time table
• estimate the exit costs
• manage and communicate with the various stakeholders, including regulators
• develop an approach to HR matters, including redundancies
• manage arising issues on an ongoing basis
• project manage the wind down and closure process
• act as liquidator and/or provide hands on implementation support
• ensure continuity in leadership and expertise by drawing on the relevant expertise from the Deloitte network
  

Helping companies unlock their potential to grow by assessing different strategic options.

Your challenges

Many businesses find themselves in a position where they are unable to prosper and grow on account of one or a combination of the following factors: external circumstances, financing constraints, the diverging priorities of their stakeholders, underperforming businesses, distracting or capital draining non-core assets.

How Deloitte can help

We bring together broad situational and industry experience to specifically focus on helping companies whose future or growth may be constrained by funding or other legacy issues such as underperforming parts of the business.

We help companies find the best way to address these issues. Naturally, the solutions will vary according to individual circumstances - frequently, financial issues will be interlinked with operational (and vice versa). Our seasoned team works in a hands-on manner to:

• provide an independent assessment of realistic options
• implement the best operational solution
  

Read our article: The international insolvency & restructuring review.

We work with financial stakeholders and/or management to conduct a review of the liquidity and related cash flow forecasts of borrowers to understand and analyse drivers of cash flow.

How Deloitte can help

Corporate Business Review requires to assess amongst others, intra month peak requirements, vulnerabilities and potential upsides. This provides shareholders or lenders with an independent view on whether its portfolio company or borrower has adequate liquidity to continue operating normally, thereby allowing time for them to consider their options.

We conduct high level ‘stress tests’ and analysis of the business plan. We can help shareholders or lenders take a view as to whether the business plan provides a reasonable basis to determine the debt capacity and to make future lending decisions or prepare management for negotiation about future funding, by taking the following steps:

• carrying out a review of track record plus normalising one-off exceptions, in order to provide a basis to test and challenge management’s business plan
• assessing revenue, costs and cash conversion assumptions included in the plan, and commenting on their reasonableness; and the use of specialist Deloitte resources to review specific aspects of the plan.(For example; prevailing market assumptions, operational metrics / improvements, pension and tax)
  

By working with management, we ensure that the turnaround plan is a roadmap for achieving sustained improvement in operating and financial performance; we bring both the restructuring skills and the mindset to create a joint problem-solving approach.

How Deloitte can help

We draw on the extensive skills of our business modelling, M&A and tax teams, as well as having access to an international network of turnaround experts. This combination of skills and expertise has enabled us to deliver multiple successful engagements.

A turnaround plan becomes essential when:

• An underperforming business or subsidiary of an otherwise healthy group needs to transform its performance.
• Management requires situational support during a turnaround planning process.
• Stakeholders need their confidence boosted before they will support a covenant waiver, debt standstill or an extension to existing facilities.
• A significant cash shortfall needs addressing through performance improvement, capital raising or disposal.
  
  

We help organisations get back on their feet by delivering service and improvements.

Your challenges

Financial & Operational Restructuring aims to extend the scope of action for a company and to give confidence to its stakeholders, especially lenders, but also to its employees and suppliers by helping to solve the problems of suboptimal performance or situation. We assist organizations that are undergoing a major transformation of their business and are thus facing financial pressure. Organizations, in other words, that need to drive rapid change, delivering improvements in cash, working capital, and profitability.

Our seasoned team works in a hands-on manner and at close quarters with management to:

• stabilise performance and liquidity
• conduct a thorough situational and financial analysis
• assess the turnaround options
• prepare a robust plan
• execute the plan
  

We work with you to deliver transactions in a timeframe of weeks rather than months.

Your challenges

Transactions may sometimes involve the sale of equity, businesses and assets or debt, potentially delivered via an insolvency mechanism. Whatever the case, time will be a critical factor when negotiating distressed acquisitions and disposals to a limited market, which may include opportunity funds.

How Deloitte can help

We focus on delivering the maximum value for clients in what are inevitably complex, time-pressured, and unpredictable circumstances, often caused by liquidity shortfalls, stakeholder unwillingness / inability to provide additional financing, deteriorated trading performance, complex stakeholder landscapes, or disaffected management.

Our combined team of M&A and restructuring specialists provides bespoke and integrated M&A support across stressed, distressed, and insolvent transactions. Our seasoned team works in a hands-on manner and at close quarters with management to:

• implement a tailored transaction strategy to preserve and realise value for stakeholders
• manage uncertainty and resolve complexity in what is often difficult and uncharted territory for our clients
• design and execute robust, value-maximising M&A processes
• identify and rapidly engage with relevant acquirers
• maximise competitive tension
• retain optionality throughout the process
  

Independent borrower advice throughout the capital life cycle.

We provide independent and tailored debt & capital advice throughout the funding life cycle of mid-cap to public Swiss businesses. We create value for our clients by increasing funding capacity and optimizing funding costs to support clients’ key pillars for development & success.

How Deloitte can help

Our team provide an independent advice and world-class execution across the full spectrum of debt markets leveraging Deloitte’s global network. We offer advice to clients on all aspects of dealing with debt providers, including the refinancing of debt, considering accessing the private debt market, and funding cost analysis.

Our Swiss team is directly connected to London colleagues and is part of Deloitte’s Global Debt practice, which comprise a leading team of 200 debt professionals based in 30 countries across Europe, North America, Africa and Asia, giving us a true global reach. In the last 12 months, the global team has advised on over 100 transactions with combined debt facilities in excess of CHF10bn (equivalent).

Helping enterprises minimizing and dealing with supply chain risks.

Your challenges

Growing financial pressure on suppliers, the impact of technology, and failing business models are driving whole-scale changes to many industries, resulting in wide spread supply chain disruption. Outsourcing strategies designed to create efficiencies, in turn, can render corporates vulnerable to their reliance on third parties, especially where a good or service is deemed to be critical to overall production.

Additionally, legal frameworks around Europe increase requirements of companies to review their supply chain business relationships in terms of ESG. Non-compliance may lead to fines and/or legal actions from authorities.

How Deloitte can help

Our team combines professionals with financial and operational restructuring skills and deep sector knowledge to deliver critical insights into the financial health of your supply chain which can significantly reduce the impact of a supply chain failure. We draw on our extensive experience of being the key advisor to companies in financial distress. We spot early signs of underperformance quickly and take action to protect your value chain as proactive intervention can provide suppliers with the support and clarity that they need to self-rescue.

We deploy situational skills focused on:

• identifying suppliers and other third parties that are business critical
• understanding a third party’s risks and the implications for your business
• implementing mitigating actions that minimize business disruption and brand damag
  

As part of our approach, we are able to employ our internally developed proprietary global data driven AI solution that provides an early warning system through real-time monitoring and evaluating media information about supply chain partners as well their financial and ESG risks.

Watch our Third Party Intelligence video.

Download the AI-Driven Third Party Risk Intelligence Solution One-Pager