Sponsor Profile

Company Profile

We apply experience and methodologies to identify the causes of the impending financial failure and implement a workable and realistic plan to save the business. The advantage of engaging R2 is access to:

• Fast diagnosis and implementation of workable solutions;
• Rapid response to maintain company viability;
• Experienced interim management; and
• Financial restructuring.

We specialise in the development and implementation of long-range solutions to the problems that created the crisis. R2 provide a wide range of expert services, including corporate restructuring, and access to turnaround finance. Where unavoidable, we can achieve restructure and rescue through "Pre-Pack" Administrations under the guidance of our strategic "partner" firms.

While the diagnosis is in process, obvious problem areas are dealt with expeditiously, to maintain viability and provide evidence of action to creditors and suppliers.

It is important that the management and board of directors fulfill their fiduciary responsibility in preserving the interests of both, shareholders and creditors. If the company is insolvent, which is usually the case, we offer:

• Support and guidance during this critical period and when required -
• Interim Management or non-executive directors to help implement the recovery strategy.

Engaging R2 gives you access to:

• Business Turnaround Consultants with many years of experience operating at Board level, with wide knowledge of industry sectors including: Business Services, Manufacturing, Engineering, Security, IT, Recruitment, Printing,
• Private Equity and Banking;
• Insolvency Practitioners;
• Specialist Lawyers;
• Specialist Financial Modelling.

Turnaround Finance

An important part of a successful turnaround involves restructuring of the company's borrowings, by introducing cheaper and more flexible finance. We will consider and introduce the most suitable lender for the company's needs.
The proposed new financier's due diligence in value, profitability, security and exposure will be carried out with the utmost confidentiality and speed.

During this process, R2 plays a significant role in acting as the strategic partner of both the company and the proposed new lender.

Turnaround financing can include:

• Equity;
• Factoring;
• Invoice Discounting;
• Trade finance;
• Stock financing;
• Asset financing;
• Debt financing.

R2's 10 Step Business Recovery

All business situations are different and, therefore, merit different approaches with emphasis on different aspects of the work. However, there are some steps that we generally consider in successful business turnaround situations. Ten of the most relevant are listed below:

1. Review and Assess the Present Situation

In a business turnaround, it is important to understand fully the starting position. We gather objective and anecdotal data in order to review the situation and to determine the causes, as well as to comprehend the immediate effects, of the issues impacting the business.

2. Develop Plans and Business Strategy

After assessing what is required to be changed for the business turnaround to be successful, we help you develop robust plans and strategy to achieve success.

It will be necessary to comprehensively document the actions to be taken, the timings, the financial impact of those actions and to obtain 'buy-in' from all of the stakeholders.

3. Communicate With Key Employees

The current business affairs should be explained and the consequences of not taking corrective action should be made known. An outline of the proposed actions to be taken should also be communicated and comments invited.

Whilst it may not be possible to answer detailed questions, seek to address the concerns of this group as positively as possible.

4. Communicate With Other Employees

It will be necessary at the earliest opportunity to meet with all employees or their union representatives, particularly if job losses are planned.

A prolonged period of uncertainty, fuelled by rumor and counter rumor, will not be beneficial to the business and whilst bad news may not be easy to deliver, the communication of it in a timely and sensitive manner is desirable.

5. Meet the Bankers

The bank and other parties with a financial investment in the business should be advised of the business turnaround plans. If possible meetings should be arranged to discuss the plans and to seek assurances of continued, and maybe, more support for the business.

6. Meet Customers

Dependent upon the severity of the situation within the business it may be necessary to reassure key customers of the business turnaround plans and the benefits that will accrue for them.

This action should be considered mandatory if the cause of the business demise has been poor customer service, poor quality product or any other matter not meeting the expected/agreed customer satisfaction levels.

7. Meet Suppliers

If the business has failed to settle payable accounts on time, even the murmur of business turnaround activity taking place may result in suppliers imposing draconian payment terms that may jeopardize the business turnaround recovery plan.

If support for the turnaround plan has been gained from the financial institutions and investors, it will be advisable to actively seek meetings with vendors to outline the plans and to seek their continued support.

8. Cash Conservation

We review and improve if necessary your credit management procedures. If possible negotiate extended payment terms to suppliers; examine thoroughly all unused assets of the business.

In addition all unnecessary overhead costs should be eliminated.

9. Implement New/Update Systems and Procedures

A thorough review of existing systems and procedures will be required to meet the goals of the business turnaround plan. Implement change if necessary; it will be noteworthy to recall that a continuation of old practices will almost certainly result in the same old results.

Positive and profitable change may be required and should be communicated to employees, so that they understand their roles in the new business environment.

10. Monitor, Measure and Take Action

Throughout the business turnaround process, results should be regularly measured against plan and corrective actions taken if required. Key performance indicators (KPI) should be determined that will give a snapshot of the business performance and be available on a daily, weekly or monthly basis.

The KPIs will include financial and non-financial measures and reflect the important aspects of the business that will determine success or failure.

Finally, pro-actively communicate the turnaround progress to all interested parties - employees, customers, suppliers as well as the financial institutions.

In our experience, a successful outcome very much depends upon the speed which the directors are able to identify the signals of the financial crises and seek early access to professional advice.