Money makes the world go round, especially in times of trouble. Distressed businesses often find themselves with dwindling cash reserves and a capital structure inconsistent with their scope of operations. And unfortunately, many businesses don’t recognize they have a problem until it erupts into a full-blown crisis. Solon Group is here to help.
Cash Management, Cost and Spending Control
When we enter a crisis situation, our first task is to bring clarity and control to the company’s real cash position as well as provide cash flow forecasting and cash management. We engage in tactical planning and negotiation with lenders and vendors to ensure lines of credit remain open and supply chains continue to perform without interruption.
With the near-term cash situation addressed, we concentrate on cost and spending controls to ensure that only essential goods and services are purchased until the company is stable.
Balance Sheet Restructuring
As markets shift, companies go through periods of time when their capital structure does not match their business model. Something has to give, and there are several choices: reduce debt, increase revenue, or shed assets. The interpretation and implementation of such choices, however, can be very complex.
We engage in longer term debt and equity restructuring to make certain the company’s financial configuration accurately reflects its business situation. It’s a focus not only on current cash balancing, but on the long-term sustainability of your company.
A company being pressed by its banks to reduce its leverage. The owners not wanting to sell assets, and other alternatives positioned to take longer than the banks were willing to wait.
We looked at their business, and realized their method of looking at operations was distorting their position. They looked at lines of business, versus geographical market segments. When we took their data and arranged results by market segment, it was immediately clear their most profitable markets were ones in which they were both market dominant and fully integrated.
Once we helped the board recognize unprofitable units, the sale of less valuable assets was easy to accomplish. The much debated and dreaded asset sales took only a month; the debt related to them was paid down, and the balance sheet was back in harmony as earnings increased. No investment bankers were needed; just experienced restructuring leaders.
Special Situations Capital Raising
Sometimes holding on to assets is mission critical, and finding the funds to allow that means the difference between success and failure. The market for capital has changed radically in the last decade. Familiar and conventional sources of financing may no longer lend at all, while new specialty lenders lend on collateral once not even imagined. We can help business leaders access new sources of debt and equity from sources well aligned to make good partners.
Transactions in Bankruptcy Court
The notion of Chapter 11 filing and court supervised proceedings can feel like a different world. Whether to put a company into a Chapter proceeding or not depends on the nuance of each situation, but the same key questions apply: who benefits, and from what, and does that serve the interests of the parties in position to make the decision? Solon Group works quietly in out-of-court matters, using our knowledge of the bankruptcy process, its nuances and practitioners to guide your team through successfully.