Interest rate reversal, energy price inflation, material price increases: according to the insolvency report by Creditreform Wirtschaftsforschung, the current economic developments and price shocks have hit many already struggling companies hard. The result after the first half of 2023: After years of falling insolvency figures, this trend has now reversed. Insolvencies have increased significantly in Germany with 8,400 corporate insolvencies. Medium-sized companies with 51 to 250 employees are particularly affected. Here the insolvency figures have risen by 133.3 per cent. Which is not surprising. Since the coronavirus pandemic and the outbreak of the war in Ukraine, SMEs have been surrounded by multiple crises. The reasons for a corporate crisis today can therefore be manifold. If a company is in crisis, only a swift and professional reorganisation can help to avoid insolvency and successfully lead the company out of the crisis. The aim of restructuring is to stabilise the company in the short term with immediate measures and to preserve its existence. In the long term, a successful reorganisation ensures the company’s success by sustainably eliminating the causes and triggers of the crisis.
The Decisive Factor in a Company Reorganisation: Time
The time factor plays a central role in a reorganisation. The earlier an impending crisis is recognised on the basis of early warning indicators, the greater the scope for action to avert the crisis and the better the chances of success. Early warning signals can be falling sales or margins. An advanced crisis in an already critical phase typically manifests itself in liquidity bottlenecks, which quickly lead to acute liquidity problems. There is then usually not enough time to avert the acute danger of insolvency. In addition to the time aspects, the financial prerequisites must be in place for a successful reorganisation. The company must fulfil a minimum of requirements in order to secure liquidity and finance the restructuring measures.
Proceed thoroughly and professionally: The way out of the Crisis
When THE MAK`ED TEAM is called into a company that is in crisis, we first discuss what stage it is at: On the timeline, crises range from strategic to operational and from stakeholder to liquidity crisis. Quick, strategic action is required to avoid insolvency. Crisis management is established within the company and a suitable reorganisation concept is professionally managed.
The restructuring concept analyses the causes of the crisis and develops ways to eliminate them. The reorganisation concept must also provide mathematical proof that the measures taken will lead to the desired success, i.e. that the company will once again generate profits and be competitive. This shows that the content of the reorganisation concept affects all areas of the company. From securing liquidity as an immediate measure to the complete restructuring of the value chain and marketing and sales. These are not only developed, but also mapped in an integrated corporate plan, which in turn forms the basis for controlling the implementation.
Creating transparency, building trust
The right communication is fundamental to all reorganisation and restructuring measures. Be it with stakeholders – creditors, employees, customers or other relevant persons. Restructuring communication is crucial for the successful realisation of the restructuring concept. After all, it’s not just figures, data and facts that are relevant – “soft” factors also count when it comes to convincing people to make concessions. Communication requires a great deal of experience, tact and sensitivity in order to “pick up” and “take along” the dialogue partners on the path to restructuring. Especially in family businesses. Reorganisation and restructuring pose particular challenges here, as the interests of the family and the company need to be reconciled and the family’s assets secured. There can be many emotions and complex constellations here.
The tools and methods that can be used here are just as varied and individual as the various crisis situations. With the right toolbox and customised methods, the desired milestones can be reached quickly and in a focused manner.
One thing is certain: the more advanced a crisis is, the more complex and difficult the reorganisation becomes, if it is still possible. That is why it is important to act immediately if you have a bad gut feeling and to have the situation assessed by a professional external expert, draw conclusions and take effective measures.
THE MAK`ED TEAM is an experienced national and international partner for the reorganisation and restructuring of medium-sized companies. We act with the right tools and methods for a successful turnaround. With our interdisciplinary team, we contribute our high level of expertise and many years of experience to restructuring projects in order to successfully accompany companies on their way out of the crisis.
Source: Insolvencies in Germany, 1st half of 2023, Creditreform Economic Research,
Insolvenzen in Deutschland, 1. Halbjahr 2023 | News | Creditreform
