30-31-corporate-restruct.qxp 22/4/09 15:50 Page 30
CORPORATE RECOVERY
TOM
MACLENNAN
DIRECTOR, TENON RECOVERY
COMPANIES OF ALL DESCRIPTIONS MAY NEED TO TAKE A CLOSER
LOOK AT THEIR OPERATIONS AND FINANCING OVER THE COMING
MONTHS, SO AVOID BLUNDERS WITH THESE TEN TIPS
1 SEIZE THE MOMENT industry, but a person with sufficient On a different note, you may have
A classic mistake that CEOs and other business acumen and experience can a business that has operated as a
senior management figures make is act as a catalyst and bring rigour to partnership, and avoided the issue of
failing to take action early enough. some of the managerial decisions. incorporation. It may be a sensible
There is a temptation to bury your A good professional adviser can decision for that company, but at the
head in the sand and hope that also fulfil this role, if they know the same time, it may be a good time to
something will come up. Often, many business well enough. Accountants explore options.
problems are identified, all of which or solicitors can often act as an
bear a financial cost, but the company invaluable sounding board on a range 4 WHERE THE MONEY IS
only has enough resources to resolve of business issues. The same goes for It never ceases to amaze me how many
half of them. Sometimes you have to consultants, it’s easy to underestimate businesses don’t understand where
choose only the most important issues how much management resources and they make money. I can’t stress how
to resolve. time it takes to plan and implement important it is to know the extent to
One of the hardest decisions is projects. If you’re bringing someone which you can afford to provide
whether to dispose of a non-core area in, and they are selected well, they discounts on a large order, especially
of the business. It might not get asset will have been through similar in this environment, where it is
value, especially in today’s market, but situations several times beforehand, important to retain as much business
if you look at the cash impact that it which is better than relying on as possible. You also need to know the
has on the business, it might be worth managers with little experience real fixed and variable costs of the
it. Also, if you defer a decision to sell of specific problems. company. Basic, I know, but after a
assets until your financial situation has review, there are often more non-
deteriorated, you might not be able to 3 ORGANISATIONAL essential variable costs than previously
obtain value anyway. RE-THINK thought, leaving more scope for
In a family business, you often have further cost-cutting measures.
2 A HELPING HAND entrenched roles in the business that
In some circumstances, one of the no one wants to challenge. The 5 CASH IS KING
most useful resources is to get help current downturn may be the first The old saying that “cash is king” has
from someone outside the business, like time, such a business will have to take never been more true. Management
a non-executive director or chairman. a hard look at itself, and sometimes teams should have short-, medium-
He may not understand that particular a good shake-up is needed. and long-term cash forecasts readily
30 Mergers & Acquisitions
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