Corporate Recovery

KCR’s Recovery Concept For Companies Experiencing Crisis

Companies experience a crisis as a result of different factors – external, internal or a combination of both. In these situations, immediate intervention is imperative in order to overcome the crisis quickly and efficiently.

The recovery process of a company in crisis requires managerial qualities that differ  from those required for “routine” company management.

The recovery process requires fast decision-making based on reliable and updated data with wide reference to considerations – operational, business, financial, legal and sometimes even personal and familial.

It is in these situations, that the unique capabilities of KCR’s team of experts expressed – stabilizing, recovering and even improving companies facing cash flow difficulties, companies in a management crisis or companies facing other unpredictable situations.

KCR’s concept of business improvement is based on three main aspects: business and economy, structure and operation, and financing and funding. The work of our team of experts includes closely tracking these three aspects, and includes three stages: introducing a financial review, formulating a recovery plan, and finally – ongoing business support to implement the plan.

The business economy aspect refers to all economic data of the company, including: the asset composition, the economic value and accounting value, the state of liquidity, the budget, cash flow management, locating and minimizing actions resulting in loss, locating unrealized potential actions and improving them, analyzing activities according to varied business dimensions, up to the individual product or service (activity sectors, market segments, geographic distribution etc.), analyzing debts and liabilities as well as diagnosing the financial needs.

The structure operational aspect includes the company’s legal structure – the holdings tree, transactions with related parties, and prices of transfer; the ownership and management structure – transactions of interested parties, dividend policy, quality of management and the nature of relations between the owners; the company’s structured organization, its information systems and reliability of reports, process of inter-organization improvement and streamlining processes, conduct with suppliers and clients, inventory management method, manpower structure and from a wider point of view – analysis of needs and understanding the market in which the company operates.

The financial and funding aspect includes the following data: debt and capital structure, repayment power and meeting financial stipulations, streamlining and reducing financing and credit expenses for the company, as well as negotiating with the banking system, clients and suppliers, creating trust with financial institutions, credit management and fundraising.


General Stages Of Corporate Recovery

Each company and each case is examined individually by KCR’s team of experts for the matter of corporate recovery. Despite this, it is possible to state a number of stages which constitute a theoretical basis for the required method of action for an effective recovery process.

First stage: preliminary examination and preparation of an extended financial review

At this stage, the KCR expert team prepares an extended financial review which includes one or more of the sections described here. The review is meant to clarify the company’s existing state precisely in order to locate the recovery drivers:

  • Operational profit and loss statement for the previous fiscal year and the current year – at a monthly detail level and divided into activity sectors and the company’s profit centers.
  • Analysis of the company’s financial state based on the audited reports of recent years, and based on the ongoing report and estimate for the current activity year.
  • Detailed analysis of the relations with the banking and off banking system, including the structure of credit limits and their composition; the features of short-term and long-term loans; the structure of guarantees; the likelihood of prices and commissions of the banking services; the state of stipulations and securities; liquidity relations; profitability relations; capital structure and such.
  • Preparation of cash flow for the next activity year, in a way which will enable the company’s continued activity as a solvent company and will also guarantee support of the improvement plan.
  • Recommendation of initial and general directions of action for the corporate recovery plan.

Second stage: formulating a recovery plan

Based on the comprehensive situation report, the KCR improvement team formulates a strategic recovery plan for the current and following employment years. The recovery plan handles all company’s activity interfaces:

  • Saving and streamlining sections in all of the company’s activity components in order to improve its ability to act and to ensure that it meets the recovery goals.
  • Handling faults thoroughly, as well as the causes of loss and wear in the company.
  • Focusing on achieving profitability and in taking advantage of opportunities for growth and renewal.
  • Feasibility analysis of current and future activities, for the purpose of evaluating the chances and risks and in order to enable educated decision making.

Third stage: ongoing business support

At this stage, the KCR expert team accompanies the actual realization of the recovery plan, with guidance, partnership and assistance in handling the current management and operation challenges:

  • Participating in management meetings and providing a close support to the members of management in realizing the recovery plan.
  • Preparing managerial and operational reports to improve the ability to control the business results. For example – meeting sales goals, budget control and meeting cash flow goals.
  • Setting sales goals according to the company’s activity sectors and controlling the achievement of the goals.
  • Creating a budget which is based on the improvement goals for the different activities and formulating a control mechanism regarding procurement processes, in order to prevent budget deviations.
  • Continuous obligo tracking as well as ongoing support to the company vis a vis the banking system during the recovery term while providing ongoing maintenance and reinforcing the trust in the banking system by the company management and its owners.

Why You Should Hire KCR’s Services

A company in crisis requiring a recovery process is in a shaky condition and requires fast decision making and different set of managerial capacities. If you are interested in changing the state of your business – an efficient and focused recovery process can unequivocally result in a turnover of business results.

For this purpose, it is needed to perform wide and in depth work and research by KCR’s team of experts.

Real recovery requires comprehensive interdisciplinary observation, and not specific analysis. The business is a complex array and should be analyzed and diagnosed from a wide perspective.