Transaction Advisory Services

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Ernst & Young Inc.

"My business is facing financial and strategic challenges. What can we do to ease the strain?"

Financial and commercial market pressures, stakeholder expectations and cash and/or capital constraints are just a few of the threats that can place immense pressure on your business.

In the face of financial stress, early actions can help stem business losses and may even accelerate the return to financial viability. Perhaps your business has had profit warnings or breached debt covenants. Business performance may be deteriorating or you may be concerned about your exposure to a particular corporate or group.

We also work with solvent businesses that may be affected by distressed suppliers, or that may simply be seeking to improve cash flow and capital efficiencies to increase financial flexibility.

However, there are times when businesses are left with few options but to seek the protection of the courts in order to continue operating.

As the leading restructuring firm in Canada, EY can help you evaluate options, create an effective restructuring plan and achieve your strategic goals. We deploy our trademark collaborative, responsive approach to develop a plan that is tailored to your short- and long-term objectives.

Click below to learn more about our services:

  • Working capital advisory

    What are the issues?

    • Day-to-day cash and working capital management may not be of focus for your company. You have a need or desire to improve cash flow and manage liquidity more effectively.
    • Existing initiatives and processes are not delivering the anticipated results or generating new savings.

    How we can help

    We help you improve cash flow and release value locked up in receivables, payables and inventories. Using a straightforward and hands-on approach, our services include:

    • Identification of where current business processes could be improved and the potential savings that can result
    • Assistance with implementation of new or revised business processes that can help convert working capital into cash flow
    • Development of systems to maintain and monitor newly implemented processes and integrate them into your reporting and forecasting systems

    The potential benefits

    • Fast and sustainable improvements in cash flow and working capital levels are possible, reducing interest costs and improving liquidity.
    • Potentially significant cash generation opportunities may be identified.
    • Our support helps facilitate a change in corporate culture and approach, enhancing
  • Short-term cash flow advisory

    What are the issues?

    • Day-to-day cash and working capital management may not be of focus for your company. There is limited or no visibility regarding your short-term cash flow and cash position because the existing forecasting process is unreliable or ineffective.
    • Lenders or private equity owners are demanding more rigorous financial information or the identification of opportunities to generate additional cash flow and liquidity from your business.

    How we can help

    We can help you track and forecast short-term cash flow. We typically develop a weekly forecasting model that covers a rolling 13-week period. We tailor our approach to your objectives, the existing forecasting process, the level of stress your company is experiencing and the time available. Our services include:

    • Objective analysis of the existing forecasting process, and identification of opportunities for improvement, including advice and recommendations on those opportunities
    • Design and development of a customized cash flow forecasting model
    • Data population of the forecast model over a short period of time to ensure that the design fits with your needs
    • Variance analysis and follow-on assistance in the development of a robust reporting process to management, lenders and other stakeholders

    The potential benefits

    • Increased rigour and control in forecasting help your company manage cash flow during times of critical need and assist in evaluating compliance with or negotiating amendments to financial covenants.
    • Our support helps create a change in corporate culture and approach, enabling greater visibility into and control over cash and the possibility for you to free up additional liquidity.
  • Distressed supplier advisory

    What are the issues?

    • Stressed or distressed suppliers threaten the stability of your company’s operations through supply-chain delays or failures.
    • Management is focused on its own business and does not have the experience to proactively address supplier issues.

    How we can help

    Through our experience assessing distressed businesses, combined with in-depth industry knowledge, we understand your suppliers and the business issues they are facing. Our distressed supplier advisory services may also be helpful for companies with distressed customers or other key relationships, such as joint venture partners, consortium partners and subcontractors. Our services include:

    • Initial diagnostics to highlight key risk areas that • may jeopardize your supply chain
    • Supplier due diligence reviews to quantify potential risks and present possible solutions
    • Assistance designing and implementing operational risk management processes

    The potential benefits

    • A realistic and timely process to evaluate and monitor supplier financial conditions reduces the potential risk of supply-chain disruptions.
    • Early identification of potential supply-chain issues helps prioritize and mitigate these issues.
  • Corporate debt advisory

    What are the issues?

    • There is a need or desire to refinance — potentially driven by, among other factors, additional financing requirements, an inflexible debt structure or relationship issues with existing lenders.

    How we can help

    Working with you to find appropriate debt structures that meet your needs, our corporate debt advisory services include:

    • Review and analysis of the current debt structure, potential future cash flows and financing requirements
    • Evaluation and advice on appropriate debt structures for your company, considering the nature of your business, its asset base, cash flow and the purposes for which financing will be used
    • Advice on ways to improve opportunities and mitigate risk inherent to new or existing debt structures, particularly when requirements may be outside normal asset values or covenants
    • Assistance with the preparation of business plans and projections for lender due diligence purposes
    • Identification of potential alternative lenders and assistance with the structuring of credit agreements

    The potential benefits

    • Developing and putting into place an appropriate debt structure help meet your business’s cash requirements and provide stability.
    • With our experience, we can provide insight and practical advice regarding the range and structures of financing available.
  • Business closure or downsizing

    What are the issues?

    • There is a desire to exit an underperforming or non-core business unit or subsidiary.
    • Management may lack experience dealing with business closures and requires support and assistance with closure or downsizing initiatives.

    How we can help

    We bring hands-on experience in winding up and closing businesses to help you assess, develop and implement a closure plan. Our business closure and downsizing services include:

    • Evaluation of the merits and risks of available options, including turnaround, sale and managed closure
    • Assistance in formulating an exit strategy and developing a closure plan considering, among other things, contractual commitments, commercial consequences, operational risks and overall financial impact, including exit costs
    • Project management of the closure plan, including advice on negotiating contract termination settlements, managing activity levels to reduce costs, advice on employee consultation and redundancy programs, sale of residual assets, mitigation of contingent liabilities and monitoring of performance against key milestones
    • Assistance in finalizing accounting and tax issues

    The potential benefits

    • The turnaround or exit of underperforming or non-core businesses can reduce the strain on your company’s resources and improve overall financial performance.
    • Outsourcing the project management of the closure process allows management to focus on its core business and strategy.
  • Business and strategic reviews

    What are the issues?

    • As distress heightens, the company may experience rapid changes in the relationship with lenders (including being assigned to the lenders’ respective “workout” groups) and increasing expectations and demands from them.
    • Unbiased information and insight into the company’s current position and projected future performance is required by lenders and other stakeholders to make informed decisions.

    How we can help

    We can provide an independent and objective view of the company, its markets and corporate strategy, and identify likely future challenges and potential funding requirements. The scope of the review will vary depending on your objectives and information needs. Our business and strategic review services include:

    • Analysis of industry and market conditions and trends
    • Critical appraisal of corporate strategy and management’s ability to deliver on the strategy
    • Review of recent and forecasted financial performance, collateral position and cash flow
    • Sensitivity analysis to assess risk and vulnerability to adverse variances
    • Assessment of short-term cash flow requirements
    • Liquidation analysis to estimate potential returns to stakeholders from a sale of the business or security enforcement
    • Assistance forming and negotiating appropriate financial restructuring solutions

    The potential benefits

    • An independent assessment of the business status, environment and management’s plans highlighting the potential risks and issues helps support credit and investment decisions.
    • Analysis of the current financial position of the various stakeholders — who is “in” or “out” of the money — provides a platform for discussions on additional funding requirements and financial restructuring.
  • Crisis stabilization and restructuring

    What are the issues?

    • As distress heightens, your company’s relationship with lenders, suppliers, customers and other stakeholders may deteriorate, placing further strain and stress on operations and management.
    • Management requires highly experienced assistance to support business recovery and restructuring efforts.

    How we can help

    Use our knowledge and experience to help you navigate unfamiliar financial crisis situations with confidence and assist in protecting or enhancing stakeholder value. Our crisis stabilization and restructuring services include:

    • Forecasting and cash management advice aimed at facilitating potentially difficult requests for further lender support
    • Assistance with communications with key stakeholders (e.g., when to engage, what to present to them, messaging)
    • Assistance in engaging stakeholders to create and maintain a stand-still environment that allows for a controlled restructuring
    • Analysis of stakeholder positions to identify key points for negotiations
    • Support to develop and implement viable financial restructuring plans

    The potential benefits

    • Engaging advisors demonstrates to key stakeholders that management is developing measured responses to the crisis situation.
    • Management is able to handle difficult negotiations with confidence, having been clearly advised on strategy and on the likely responses of the various stakeholders.
  • Formal insolvency

    What are the issues?

    • The company is unable to continue to operate “as is” due to cash flow constraints, creditor pressure, withdrawal of funding or other issues.
    • In order to protect the value of the business and its assets, restructuring through a formal insolvency process is necessary.

    How we can help

    Generally, one of the primary objectives of a formal insolvency process is to improve the returns to a distressed company’s creditors. This may be from the continued operation of the business while the company restructures under the supervision of a court-appointed officer and/or from the liquidation of some or all of the company’s assets. Through our formal insolvency services, we act in various court‑appointed capacities, including:

    • Monitor under the Companies’ Creditors Arrangement Act
    • Interim receiver, receiver or receiver and manager under the Bankruptcy and Insolvency Act or provincial statute
    • Trustee under the Bankruptcy and Insolvency Act

    The potential benefits

    • The involvement of the court and a court-appointed officer adds transparency and credibility to the process. We offer extensive experience acting in a wide range of formal insolvency appointments.
    • The stay of proceedings in a formal insolvency process provides immediate relief from creditors and may create additional short-term liquidity for a company continuing to operate under court protection.
    • A formal insolvency process offers greater flexibility in restructuring. The company may, among other things, repudiate certain contracts and real property leases. As such, management may be able to restructure the business at a significantly lower cost than would be possible outside a formal insolvency process, thereby stemming operating losses and potentially restoring the business’ viability as a going concern.
    • Certain claims against directors of the company may be compromised during a formal insolvency process.
  • Accelerated disposals and acquisition

    What are the issues?

    • There is a need to quickly divest of an underperforming or non-core business unit or subsidiary through a controlled sales process.
    • Management requires support and assistance with a disposal or an acquisition of a stressed or distressed business, possibly through a formal insolvency process.

    How we can help

    Sell side

    In circumstances in which a sale of your business or group of assets appears to offer a suitable exit but is required on an accelerated time frame, we work with you to execute a transaction. On the sell side, our accelerated disposals services include:

    • Integrated sell-side due diligence investigation, including assessing the reasons for underperformance and unique selling points of the business
    • Forecasting and cash management advice to identify and address critical cash flow constraints that can affect the time frame for the sale process
    • Project management of the sale process and marketing of the business in an accelerated time frame
    • Assistance with deal structuring and negotiations with potential buyers
    • Assistance developing contingency plans to limit the risk of value erosion if factors arise that destabilize the sale process or the process fails

    Buy side

    Acquiring a business out of insolvency may be unfamiliar territory for management. Our insight can help you navigate potential challenges and pitfalls that may arise during the sale process. On the buy side, our accelerated acquisitions services include:

    • Integrated due diligence investigation, including identifying and evaluating key risk areas and reasons for distress or insolvency
    • Assessment of the distressed target’s current financial situation (e.g., assigned to the lender’s workout group, in a formal insolvency process) and the impact of the situation on a potential transaction
    • Advice on transaction structures, so that risks are reduced and only assets or parts of the business that are necessary for your purposes are acquired

    The potential benefits

    • Distressed companies may be able to realize additional value from the sale of an underperforming business unit or subsidiary.
    • Early identification of potential issues and our familiarity and experience of the nuances of distressed M&A transactions can help you accelerate the sale process while providing the opportunity to minimize value erosion caused by distress.
    • Complete understanding of the context and process in which distressed businesses are available for sale can help you anticipate, avoid or manage the associated risks.

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