According to a survey by the Association of German Chambers of Industry and Commerce, for example, 40% of the companies they surveyed complained about a decline in their equity. The year 2020 resembled an emotional roller coaster for most entrepreneurs. Despair and hope constantly alternated. But even months after the outbreak of the crisis, helplessness and uncertainty are still omnipresent. Many entrepreneurs now find it almost impossible to extricate themselves from the crisis on their own. We at Corporate Finance Mittelstandsberatung GmbH (CF-MB) have specialized in finding customized solutions for complex corporate transactions. In the following, we would like to explain how you can master the crisis in ten steps with the help of our consulting services.
1. initial meeting and crisis assessment
In a non-binding initial meeting, we get to know each other and discuss the individual impact of the Corona pandemic on your business model, your objectives, the cornerstones of our cooperation, and how to proceed. We are aware that speed is of the essence. Saving your business is our top priority. Due to our hands-on approach, we are able to coordinate a quick appointment after your call and to support you from then on with the full commitment of our team.
2. comprehensive analysis of the actual situation of the company
On the basis of your documents, we analyze the situation in which your company finds itself. In doing so, we pay attention to how your business was doing before the crisis, what factors led to the drop in sales, and analyze which business areas and products are making or losing you the most money. We also evaluate how long your financial resources will last, assuming different scenarios.
3. evaluate cost savings
An important part of managing any crisis situation is to identify cost savings opportunities. This does not always have to involve laying off employees. Reducing fixed costs, streamlining processes, or renegotiating existing contracts can also lead to success. Creativity and experience are important key words when planning cost savings.
4. creation of integrated financial and liquidity planning
In times of the Corona crisis, liquidity ratios are coming to the fore more than ever. Based on your revenue and cost positions, we will create a detailed liquidity plan to secure short-term operational measures as well as an integrated planning model that will help you strategically align your business and serve as a compass for future decisions.
5. identification of available financing options
Once we have analyzed your company’s revenues and expenses and created a customized planning model based on this analysis, the available financing options can be determined. The first step should be to explore closing the liquidity gap by raising additional debt capital or applying for Corona relief funds. Other attractive options include factoring or asset-based finance, for example.
6. consideration of raising new capital or a distress sale.
If the classic means of financing have been exhausted, the possibility of taking on an equity investor should also be examined. Properly applied, this measure even represents the ideal way to overcome a crisis in the long term. In addition to capital, a financially strong investor can also contribute strategic resources such as experience or contacts. Moreover, taking on a new investor sends a strong signal to the banks that an ailing company can get back on the road to success. In particular, if the financial analysis has shown that the business has profound liquidity problems, the shareholders can still prevent the worst by initiating a distress sale in good time.
7. determination of the appropriate strategic approach
Every company is individual. Consequently, every strategy should also be tailor-made. CF-MB’s consulting concept has always been based on this approach. We therefore always make our recommendations for action in line with your individual liquidity situation, the age structure of the shareholder base and the future prospects of the corporate sector. In cooperation with you, we discuss the next steps and plan the next course of action.
8. development of an individual crisis concept
The result of these strategic considerations and the previously conducted analyses is a crisis concept tailored to your needs. Our aim is to ensure that you either emerge stronger from the crisis or, in the event of a (partial) sale, receive a fair price for your life’s work.
9. preparation of essential marketing documents for approaching investors
If your target or liquidity situation requires the sale of the company or the raising of an equity investor, you need a convincing selling story to attract capital providers. At the same time, it is important to maintain discretion and not to disclose too much sensitive information. In this respect, we at CF-MB are at your side with our experience from more than 100 successfully completed transactions.
10. Implementation of the crisis concept
No matter which way out of the crisis you choose — be it a distress sale, taking on an equity investor, or fighting the crisis on your own by exhausting all liquidity-boosting means — with CF-MB you have an experienced partner who will advise you on all corporate finance issues in a professional and customized manner. Together, we will implement your individual crisis concept and ensure that you overcome the Corona crisis and get back on track for success.