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Missed payments, maxed out credit lines, management turnover and unreturned phone calls are just a few of the precursors that indicate it’s time to recommend a restructuring specialist to assist the distressed borrower. This article explains how a specialist can identify costs that can be cut and noncore assets that can be liquidated. It also explains why forgiving or restructuring debt might be advisable. A sidebar discusses ways a restructuring specialist can recommend creative alternatives to improve cash management.
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Lenders who understand the details underlying business operations are better able to minimize risk — and maximize return. This article shows how to think beyond financial statements and tax returns, and look for skeletons in the closet — and hidden opportunities. It explains the importance of determining whether the company has key people who are there for reasons of competence rather than nepotism and that it has annual insurance reviews to ensure adequate coverage.
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Businesses generally release annual financial statements to let interested parties, including lenders, evaluate their financial health. But proactive lenders should want more than one “snapshot” per year of their borrowers’ financial well-being. This article looks at how interim financial reports can be invaluable in revealing changes in the borrowers’ stability, but also shows that these reports have certain drawbacks and limitations.
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Financial statements show how a company has performed in the past. But historic data doesn’t necessarily predict future performance, especially in an uncertain, volatile market. Projections and forecasts better gauge default risk, but this article shows how lenders can take the process one step further through scenario and sensitivity analyses.
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