Remediation report

External expert opinions

Independent, accurate, holistic.

If a company finds itself in a crisis situation – which is already the case for many or is foreseeable in the medium term despite extensive credit relief and state aid in times of covid – action must be taken quickly in order to secure liquidity and obtain the necessary debt capital. As a safeguard before disbursement, financing partners often demand a qualified and convincing expert opinion from a qualified, neutral business consultant.

Banks and also the funding institutions behind them, such as KfW and state guarantee agencies, are reacting to the current covid crisis with accelerated examination procedures. This is to be welcomed in the sense of a quick creation of liquidity! Thus, up to certain limits (which, moreover, will presumably be set differently from bank to bank), either no external appraisals will be required or “only” quick, reduced compact appraisals. If the borrower exceeds the limits set by the lender or if the ﬁnancial distress is greater, then the lenders will demand a detailed restructuring expert opinion according to IDW S6.

A motivated team is available that combines expertise in liquidity and financial planning with many years of restructuring know-how and in-depth industry knowledge.

Remediation reports according to IDW S6

Accurate analysis of business model, restructuring capability and restructuring strategy.

A restructuring concept must answer the following questions: Is your company able to overcome the current crisis situation? What concrete strategic and operational restructuring measures need to be taken? How is the restructuring path reflected in the ﬁnancial planning?

Unlike most providers of so-called S6 reports, we place a special focus on the presentation of the business model, its realistic opportunities and risks, as well as the relevant market and its drivers, in addition to the topics that must be covered (see the list below). This is often neglected in other reports, but it is essential. In addition, this increases the value of the report for the company, which ultimately has to bear its costs. It therefore not only facilitates the granting of credit (or makes it possible in the first place), but also creates a stable basis for strategic and operational decisions during and after the restructuring. Let us work this out together.

Objectives and core components of the restructuring report:

Initial situation: company proﬁle, net assets, financial position and results of operations, market and competition analysis
Crisis stage and causes
Future mission statement: strategic orientation and mission statement of the rehabilitated company
Restructuring concept and measures to overcome the corporate crisis
Integrated business planning: interlocking multi-year planning framework with sound assumptions
Assessment of the ability to restructure: prognosis of continued existence, competitiveness and profitability

In addition to specialist expertise, a holistic assessment of the business model, a sustainable restructuring concept and a realistic implementation timetable are important. The goal is a promising restructuring plan and its acceptance by all of the parties involved.

However, after the restructuring report comes the actual restructuring. The task is to master the subsequent restructuring process with the help of stringent project management so that the measures also take effect promptly. maconda provides support in all phases – with objectivity, proven experience and a restructuring approach clearly orientated to the specific needs.

Compact assessment IBR

A trained eye for finance and the market environment.

Also during the covid crisis, banks have to look at the credit risk. Although the liability ceilings are being raised and state guarantees facilitated, there remains a residual risk with the house banks, which must take their own precautions to limit losses. It is precisely this unprecedented situation and the uncertainty it creates that require valid decisions to be made when granting new loans and guarantees and when extending credit lines. This is particularly relevant when things have to move quickly given that many banks are affected by This means that things have to happen quickly given that many of the banks suffer from a shortage of staff.

An Independent Business Review (IBR) facilitates decision making for banks that face a multitude of credit checks and is an important part of the documentation, particularly in borderline cases. For companies that now need loans to maintain liquidity urgently, an IBR can speed up and simplify loan processing. This applies particularly if the company has already reported lower sales and earnings levels prior to covid.

In essence, the question is whether the performance slump is only temporary and induced by the covid crisis or whether it will be a permanent issue. This often requires an external assessment of the borrower’s current situation by an independent advisor with a trained eye on earnings drivers, market positioning, operational performance and the future viability of the business model.

What you can expect from us at the Independent Business Review:

Business model: Evaluation of the business model; customer value analysis, supply chain; sustainable positioning and competitive advantages – also taking into account changed requirements due to digitalisation; strengths/weaknesses proﬁle, technical basis (including realistic capex requirements)
Financial analysis: Analysis of the ﬁnancial status-quo; critical assessment of the short- to long-term earnings, asset- and financing forecast; sustainable debt service capacity to repay the increased financing volume; rolling liquidity forecast in our integrated model; sensitivity analyses
Assessment of future viability: Analysis of future scenarios; (brief) assessment of corporate strategy; market forecast; opportunity/risk proﬁle
Options for action: Identifying fundamental alternatives; measures to reduce costs and increase efﬁciency; long-term action parameters beyond covid

The IBR based on IDW S6 is an independent assessment of the borrower, especially when things have to move quickly and a brief appraisal is sufficient. A lender (or non-operating shareholder) thus receives a well-founded, transparent and accurate decision-making basis for renegotiating or adjusting existing loan and other contractual terms. The maconda analysis is comprehensive and, in addition to the indispensable ﬁnancial outlook also includes, above all, the future viability of the business model, the market and competition, the customers and suppliers as well as the necessary technical basis. This distinguishes us from auditors, whose focus is clearly on the numbers, but not on the market conditions that are so important for the future.

In doing so, we do not simply allow market assessments to be explained or even dictated to us by the management, nor do we rely on just any market study just because a presumably well-known name is behind it, but look very closely and validate external factors precisely and with a high degree of accuracy. The results are summarised in an informative report that meets our usual high standards.

Enquiries

Does your financing partner require an external assessment? Whether a detailed S6 report or a compact IBR – we know what is required and are happy to contribute our expertise.

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