TFG | Addressing the fundamental lack of available risk capital that can be applied quickly in a financially distressed business

Getting Turnaround Finance Deals Done: Structured Approach in a Very Short Time Period

The chart below illustrates the type of work flow that is required by both the company’s management and the professional advisor to get a turnaround finance deal done, bearing in mind the very real time pressures.

In explanation of the above chart, here are a number of points worth making.

The pre-action or pre-engagement period can be both very short or quite long before initiating action. Some assignments only get going after many (often tortured) meetings. Others spring into action as a result of an urgent phone call on a Sunday evening.

Although this chapter focuses on turnaround finance, it is axiomatic that the refinancing can only be meaningful if it is done concurrently with the management changes and new game plan, and (if appropriate) the restructuring of creditors.

It is a great mistake to work on one aspect only – the finance follows the management changes (not the other way round).

Communication in these deals is everything. Many deals go badly wrong due to poor communication. The chart above illustrated the key players that must be communicated with in a turnaround finance deal. The relative importance of each player will vary on each deal. However, the key is to identify their relative importance at an early stage and structure the work and communication focus accordingly.

Turnaround finance deals constantly change. This makes it difficult at times but all parties need to be as flexible as possible to get these deals done.