Resolving over-leveraged balance sheets
Most board members and management teams only experience corporate financial difficulty once in their career. The situation can be confusing as stakeholders priorities change as companies face covenant breaches, maturity deadlines, or liquidity crunches. There is however, an optimal way to navigate the situation and give the company the best chance of survival with a fixed balance sheet.
Whether the optimum outcome is a covenant reset, a refinancing, an “amend and extend”, a financial restructuring, or a sale of all or parts of the business, stakeholders need financial, strategic, and operational insights to make fully informed decisions. This requires a realistic view of the company’s position and prospects, through the development of a robust business plan. Based on that plan, early identification, evaluation, and prioritization of the options available to the company and its stakeholders are critical to achieving a successful outcome. Subsequent implementation can require extensive support.
It’s the board’s responsibility to make sure the company is driving the process. That means proactively engaging the key stakeholder groups to provide relevant information and facilitate decision making, and liaising with stakeholders and other teams to move forward quickly and efficiently.
Deloitte professionals have first-hand experience.