Facing up to uncertainty
7th December 2016 by Mark Upton
As we come to the end of 2016 and look forward to 2017 I think it is fair to say that at the start of the year not many of us would have predicted that we would now have the combination of Brexit and Donald Trump as President Elect.
As a consequence and when listening to commentary on the future political and economic landscape I would suggest that the word we hear most often is ‘uncertainty’. Whilst it is undoubtedly true that there is uncertainty, have we ever lived in a truly certain environment? Businesses and business owners have always adapted to the situation that presents itself and the key to success is recognising the challenges and planning ahead.
This is particularly the case if a business is facing financial distress and, whether as the consequence of the impact of Brexit and currency fluctuations, delays in investment decisions and capital spend, growing inflation and wage stagnation or any other factor, the importance of identifying and recognising critical factors and seeking advice and assistance is paramount.
As somebody that regularly works with businesses in distress it has been interesting and rewarding to have been able to work with a number of businesses that have recognised the need to take advice and have seen the value of engaging at an early stage with all stakeholders to ensure that the business is able to survive rather than necessarily face an insolvency procedure.
There are a number of funding options that can be explored and in my experience there is willingness on the part of lenders to fund businesses and to deal sensibly with the areas of distress. Any turnaround plan will often involve some structural changes and there are likely to be some tough decisions to be made and the introduction of high level financial and operational assistance to the current management team may be required.
One of the options that can always be explored is a sale or a distressed or accelerated M&A process that handled correctly can still maintain and protect value for both shareholders and other stakeholders, including creditors.
The key to dealing with uncertainty, particularly in a distressed situation is to have good information on which to base decisions and getting the right advice and expert assistance at the right time. There are undoubtedly some businesses that are going to face some tough times ahead in 2017 but there are always many options available that if implemented early enough in the right manner can still provide good outcomes for shareholders, directors, employees and all other stakeholders.
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