Helping manage liquidity and stabilize business
COVID-19 has created unprecedented disruptions for companies across sectors and geographies. We provide trusted leadership in such urgent and complex situations, helping clients solve immediate challenges and sustainably improve their businesses over the long term.
Particularly in the face of the COVID-19 crisis, we are working closely with clients to address individual concerns, including short-term cash flow, debt covenants and tax impacts under various scenarios, as well as stabilizing the business.
What EY can do for you
We help clients make better and more informed decisions related to value recovery, preservation or creation — with a clear focus on execution for your particular situation. As clients face abrupt sales declines, credit concerns and supply chain disruptions, we are helping manage liquidity in the following ways:
- Extending liquidity runway
- Maximizing one-time revenue opportunities
- Realigning and reducing costs
- Employing working capital crisis management techniques; idling cash-burning operations
- Deferring capital expenditures/R&D
- Developing crisis contingency plan
- Identifying temporary vs. normal-course performance
- Sensitizing cash flows for risk outlook and contingency plans
- Aligning operational plan and developing KPIs
- Building real-time reporting dashboard and KPI tracking
- Providing stakeholder management
- Prioritizing and negotiating needs to enable short- and long-term viability
- Communicating concise plan to suppliers, customers, lenders, equity sponsors, government, employees
- Establishing credibility and maintaining control
Other ways we are helping clients manage through the current market environment:
- Rapid crisis-impact assessment — assessing areas across functions, including employee health, short-term liquidity, government incentives impact, insurance, productivity of remote workplaces and stakeholder communications
- Crisis response center — skilled crisis management, communications orchestration and surge resourcing of specialized resources
- Contingency/business continuity planning — assessing impact to earnings for the next six quarters, including developing a strategy to bridge any forecasted shortfalls in earnings for each quarter generally, and more specifically six months out
Below is additional information about how we help clients with their unique challenges — from value recovery, to value preservation, to value creation:
Most restructurings need a “Plan B” — whether as a contingency plan to provide comfort for directors and stakeholders or, alternatively, for financial stakeholders to create a credible “stick” to break the deadlock and help all parties reach a consensual deal. In particularly challenging situations, when directors and businesses are facing increasing risks and challenges to continued trading, we create the time, space and environment to develop and deliver the right solutions.
We work with management and financial stakeholders to use the pace, protection, powers and flexibility available under insolvency laws to address the issues threatening a business’ survival. We use contingency planning and insolvency solutions to create restructuring legacies by increasing the chance of a consensual restructuring through a credible “Plan B,” delivering a rescue that could not otherwise be achieved, preserving and recovering value, stabilizing critical services, and protecting jobs or by providing a controlled exit.
Group structures can become increasingly complex through M&As, JVs and organic growth. This can lead to increased costs, as well as difficulties managing risk, simplifying operations, improving transparency and complying with changing regulations.
We have experience supporting the complete spectrum of organizations, whether large multinational companies seeking to reduce their global entity footprint, or a small domestic organization looking to remove a single entity from its structure for a specific purpose. Our team integrates restructuring, tax and financial advisory knowledge to help organizations assess, rationalize and simplify their legal entity structures across the following key phases of corporate simplification: setup, group complexity analysis, program management, due diligence, and issue resolution and entity eliminations.
The adage that “cash is king” is more relevant today than ever. Dynamic and disrupted markets, geopolitical uncertainty, and ever-growing corporate transparency are putting increasing pressure on companies’ liquidity and cash flows. Many management teams struggle to sustain good control over short-term cash flows and the working capital that drives them, leaving the business vulnerable to market and operational changes.
We have experience supporting the complete spectrum of companies, whether a successful business seeking to enhance shareholder value or an organization experiencing a cash crisis. We help you develop the three main ingredients of strong working capital management: identification of cash-generating opportunities, cash flow forecasting, and visibility and control through our advanced digital analytical techniques.
Restructuring or turning around an organization brings many challenges on top of the daily demands of running a business, for example: managing competing agendas, creating time to develop options, knowing which option is the right one when information may be imperfect and executing decisions at pace to maintain stakeholder support in a stressed environment.
We create understanding, alignment and support with internal and external stakeholders. We focus on actions that help to deliver transformational outcomes and can provide interim management solutions to help you deliver results.
Stakeholders are asked to respond quickly when businesses underperform, or suffer liquidity shortfalls or value erosion. We help provide support in a rapidly changing environment when information is incomplete, agendas no longer align and confidence is reduced.
We work with all stakeholders to preserve, create and realize value through restructuring advice, critical appraisal of a company’s ongoing viability, stakeholder intermediation, options analysis and entity priority analysis.
Preserving value for a company and its stakeholders often requires a reshaping of the capital structure and assets in the portfolio. This is often achieved by a combination of financial restructuring and liability management, together with M&A activities to dispose of non-core assets and potentially source new equity. EY professionals are experienced in helping you analyze, structure, negotiate with stakeholders and execute the best possible solution.
In the USA, Ernst & Young Capital Advisors, LLC (EYCA) is a registered broker-dealer and member of Financial Industry Regulatory Authority (FINRA: finra.org) and offers investment banking services with access to EY debt restructuring, M&A, debt capital markets and equity capital markets professionals across the globe.
Most businesses are likely to experience operational challenges and underperformance at some point. While the root causes can be buried, the negative impact can be highly visible — profit warnings, declining performance metrics, failure to achieve project milestones, loss of customer contracts or management departures.
Whether a business is in crisis or is simply facing an operational challenge, our team is experienced in helping management teams identify and prioritize the most critical issues, stabilize the business, establish a leadership and stakeholder consensus around the solution, and deliver tangible results quickly.
Our hands-on value creation leaders help PE companies (and sponsors) deliver their investment case by accelerating cash and profit improvements, from ideation to results. We prioritize our involvement to focus on situations we know best: complex carve-outs, functional transformations, and instances of stress or distress.
Tax considerations in value creation, preservation and recovery
We advise in implementing commercial transactions that balance the material tax considerations with your overall business objectives. Learn more.
Contact us for immediate support through these volatile and uncertain times
We have a clear view of the critical questions and new answers required for effective crisis management, business resilience and continuity.