Reacting to special situations in today’s economy – KPMG

Author:  Aaron Collier, Director, Advisory
KPMG in Canada

In today’s circumstances, businesses face a number of situations that pose a threat to their operational and financial efficiencies. Special situations can range from unique business challenges such as the loss of a key customer contract or legislative dispute, to global recessions or black swan events that can impact the economy at large. In either scenario, when facing a critical situation the key for any business is the ability to assess and react early.

Here are a few key areas to focus on to ensure your business is equipped to handle current or future situations:

Liquidity and cash management

Management needs to consider reevaluating core assumptions in financial models to stress test key variables underpinning liquidity and cash management forecasts and to draw light to alternate scenarios. You should be looking into designing and building financial models to capture changing core scenarios and driving strategic decisions by identifying where future vulnerabilities may exist.

Capital and debt

It’s important to review existing capital structures and debt facility agreements. You should negotiate with lenders to secure financial covenant amendments/waivers, obtain flexibility to debt agreements and look at competitive solutions for refinancing existing facilities.

Rapid performance improvement (RPI)

It’s critical that your business has the ability to, within a short period of time, efficiently assess a situation and identify and adjust fundamental business levers to enhance cash flow generating capabilities, improve operations, reduce costs and maximize EBITDA.

Distressed/Accelerated M&A

In distressed scenarios and working with constraints faced by the business, it’s important that your business can deliver a timely sale of shares or sale of business and assets, either within or outside a formal proceeding while generating fundamental value to shareholders.

Business continuity planning

In special situations, your business needs to focus on developing a plan for responding to and recovering from crisis events. This includes identifying crisis triggers, crisis monitoring, crisis plan implementation and execution, as well as conducting crisis simulations and managing internal and external communications.

Restructuring

In times of uncertainty, stressed companies need to act quickly and decisively to avoid critical complications. Examples of core areas of focus include: crisis cash management, financial and operational restructuring, insolvency, strategic and financial review and turnaround planning and implementation.

Learn how KPMG can support your business in managing special situations.

 

To help you enhance your organization’s financial and operational performance, please contact:

Aaron Collier
Advisory Services, KPMG in Canada
acollier2@kpmg.ca

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