Spark! Business Rescue & Turnaround - Getting Started
Astoundingly, most distressed firms spend less time weighing up their options than they do test driving a new car, hiring a new manager, seeking a second opinion for a medical condition, or choosing a holiday destination and to their deteriment. We are different, and this is how:
- We do not insist on any upfront deposit, ever. We do not use cash on hand to assess an individual or business.
- Our methodology is not one driven as a legal process, but as a business survival strategy and is broader in scope.
- The lawyers we partner and use come from a combination of well established large firms, and highly skilled and experienced independants.
- We pride ourselves on successful turnarounds and have a long track record of rescues where members, creditors and staff all benefited beyond their expectations.
- It is completely acceptable and to be expected for a restructured entity to emerge.
- We conduct a single business rescue at a time as our methodology encompasses far more than what the act requires, we do what is needed.
- We insist you meet our references, preferably alone, and discuss their experience - highs and lows!
- We invite you to interview the creditors of our previous rescues to get their view of how we add value.
- We focus on your business issues and drive an effective and immediate intervention.
- We apply lessons learned from leading large businesses, and from many previous turnarounds.
- We conduct a structured, effective and thorough Reasonable Prospect assessment with well substantiated and tested reasoning.
- The Propsect phase allows for a rescue to be conducted that implements operational and business change from day one.
- We don't waste valuable time waiting for rescue plan approval before we take action, we implement rescue intervention from day one!
- We provide superior value for money, world class expertise without the need to cover any extravagant cost base.
- We invite the closest of scrutiny and will explain in detail from the word go on what we will do and how we will do it.
- We provide you with a full set of our typical deliverables and full access to previous rescue online portals that provide full proof of what we will do for your business.
- We do what is needed, not just what is legally required, and provide a full rescue solution including access to refinancing and post commencement financing.
- In more than one instance we have invested in distressed firms and taken a majority shareholding where existing creditors benefited and no other funder could be found.
Unfortunately if you need an asset stripping disguised liquidation, we are not the right people for you, but if you are using business rescue for the purpose of survival, then you are in the right place. We have been involved in many successful rescues and turnarounds, around the world, and we will treat your business with great respect, and make every effort to see it survive and be well positioned to thrive.
Integrating and working effectivey with lawyers
Roles and responsibilities must reflect an appreciation of the desired outcome, so context, timing and clear mandate are crucial.
Generally lawyers might perform any of various functions, either as an:
- Advisor, providing an informed understanding of the client's legal rights and obligations and explaining their practical implications. Essential when considering tactics and options in the planning phase, and in considering defensive tactics.
- Advocate, rigourously asserting their client's position under the rules of the adversarial system. Typically seen when secured creditors are represented, we see only a single short term stakeholders interest being considered to the wider detriment of others and with no consideration of longer term value creation.
- Negotiator, seeking a result advantageous to the client but consistent with requirements of honest dealing with others. However, the competencies needed to source, negotiate and secure post commencement funding require a business approach.
- Intermediary, seeking to reconcile divergent interests as an advisor and, to a limited extent, as a spokesperson for different parties. Where minority creditors are prejudiced by the legal rights of a senior creditor, resorting to legality does not win the day.
- Facilitator, representing neither party, but helping the parties arrive at their own solution. Too often ignored and this should be conducted in making every effort to avoid a formal rescue and to rather use workouts and compromises instead.
- Evaluator, examining a client's legal affairs and reporting them to the client or to 3rd parties. Most often seen when either Pension and Provident Fund liabilities or SARS obligations have been handled negligently.
No matter how competent, it is difficult for a lawyer alone or legal team to adopt different combinations of these roles and some of these roles are fertile ground for escalating conflict and are better suited to negotiation and dialogue between people with existing relationships rather than one more used to adoptig an adversarial stance. There is time enough for that. Furthermore some of these roles require broader scope than merely the legal as is the case in securing post commencement funding or negotiating refinancing or restructuring the business.
And here for the Turnaround Management Association of South Africa, is proof of membership. the TMA-SA link is provided at the bottom of this page.
Very graciously, some senior business leaders have shared their thoughts about us, If you follow the link in the header, or just click here, you can get a sense of who we are and that we under promise and over deliver!
The Business Rescue Information you need
You'll find what you need here to give you some piece of mind
- Firstly, you probably need someone to talk things through with, so for a discrete discussion, with no obligations call Ivan's mobile +27(0)76 834 17 59 or you can always just or
- You'll want to understand the process, in plain English free of jargon A walk through of the generic Business Rescue Process.
- Very important is the "Reasonable Prospect" opinion and step in the process, here is some good advice and how we go about generating this opinion.
- Part of the "reasonable prospect" must be, the preparation and pre-reading documentation we'll need.
- Then you'll want to understand fees and costs - easy, we're negotiable and willing to go on risk - no approval of your plan and we'll share the pain!
- You'll want to know who you're dealing with and know you are in safe hands. Why working with us gives you a better shot at survival.
- You'll want some assurance on the quality of the plan that we'll produce with you Rescue Plan Deliverables.
- And finally, you'll need to know how to prepare and help us get up to speed. Here's our week 1 skeleton plan and actions.
- Finally, owners, managers, board members, basically anyone in a leadership role in this distressed business. needs to think about the many conflicting incentives and motives that you will need to navigate and balance - straight talk.
Business Rescue or Turnaround - what's the difference?
A Business Turnaround is considered an "informal" process whilst Business Rescue is "formal". What this means essentially is that a Business Turnaround is free of court proceedings and any requisite provisions. In a Business Turnaround, our approach is to conduct a very hands-on business coaching style, to impart and share tools and business management practices. It is a far more collegiate approach with fewer constraints. Please visit our turnaround pages for more information on what we do and how we do turnarounds.
The Rescue process does allow for a period free of creditor obligations as well as other contractual agreements, but for a limited period of time. From an actual business review, analysis and implementation perspective there is no big difference from our point of view, except for the time-constraint. Our approach to a Business Turnaround benefits both the business leadership and the business itself. It is important to note that the court will only confer Business Rescue status if i) the enterprise is financially distressed and ii) there is a realistic chance of the rescue succeeding. In the process, approval for the rescue plan (including necessary funding) must be sought. Even if a business rescue is envisaged, the work done in a turnaround will inform the court as well as increase the chance of the plan being approved.
Business Rescue is about Rescuing the Business, within a Process
The following pages provide some very basic information on the Business Rescue Process as dictated by the Companies Act, and hopefully also provides sufficient insight on the details of our Business Rescue Service. Legislation refers to the Business Rescue Practitioner, which is the role we perform, but with one big difference. We are not lawyers, we have made a career out of Business Turnaround delivery, and our strength is the analysis of the business and its survival. On legal matters we defer to the lawyers, on strategy, the balance sheet, the income statement, process engineering, the operating model, organization design, programme and project management, we require no assistance, this is where are so very different to other rescue practitioners.
Our Business Rescue Service is exactly that, intended to quickly create focus on remedial and rescue opportunities which are of high impact, but often over-looked, and crucial to a rescue. Again, we are not lawyers, (there are plenty of them at hand), we are practical business people having participated in and led many successful turnarounds. We will be forthright in our commentary, and this should give you an alternative view on the our Business Rescue process focus.
The Business Rescue Process demands much from the Practitioner
Not least of these skills should be Strategic and Operating Model analysis skills backed up by excellent finance, process skills and programme management competence. This is why, for the fee of a single business rescue practitioner, we conduct the planning with a team , which allows us to deliver a business rescue plan which has had a better business analysis done, (our work streams are comprehensive) which in turn allows for a more detailed plan, with the assurance every opportunity for rescue action has been reviewed, which in turn increases the chance of approval.
The following pages provide you with a level of detail that should give you a very good idea of the chance we give the business. Week 1 Planning is used here to illustrate our Rescue and Turnaround skill sets, where we introduce to you some of the powerful yet simple tools we deploy, such as Value Based Management Curves and Value Trees.
The emphasis of the links below is that of identifying every possible opportunity when formulating the Business Rescue Plan or Proposal. The process we follow meets all the legal requirements, but most importantly, embraces the spirit of the process, giving the business the best fighting chance of survival. This is no tick-box exercise!
- Definitions and Background on the Business Rescue Process. .
- A walk through of the generic Business Rescue Process.
- Very important is the "Reasonable Prospect" opinion and step in the process,especially for Voluntary rescue, here is some good advice and how we go about generating this opinion.
- Part of the "reasonable prospect" must be, the preparation and pre-reading documentation we'll need.
- What a Business Rescue Plan is legislated to contain and the extra effort we deliver.
- Business Rescue & Turnaround Week 1 activities after late engagement.
- Transparency and good communication is vital, so here's a mock-up of the html page and the documents we'll deliver as we progress through the rescue process.
- Lastly,For Your peace of mind - Personality Profile, Experience, Education and References.
Coaching & the Turnaround - much can be done before filing for Business Rescue!
Rescue is only one of a wide set of tools available to you in the broader insolvency framework. With sufficient time, anything can be achieved and the pressures and expenses of a rescue avoided! Our preference is to get involved prior to formal Business Rescue, (this we refer to as a Turnaround) and to address the various business issues as if we were in a state of formal Business Rescue - the difference is that the business leadership will be there, you can make decisions, and we have more time and fewer stakeholders to manage. We do retain the urgency! This very intense coached relationship focuses on survival but in ways you will find innovative and practical. The focus here is on Cash and Value Management initially, but then cycles through People, Strategy, Execution, with particular focus on adoption of new behaviors and habits. Very few coaches have either the appetite, ability, experience or personality for this type of work and with consultants not wanting a client who might not pay, where does that leave a struggling business? Well, contact us, you'll be so glad you did.
We strongly advise you to act as soon as you can if you have any fears for the future, even if it is just a quick telephone chat. If we can't help you we'll help find the right person for you, this could be a new customer, supplier or investor - we'll help you if we can, just for the reward of having done the right thing.
Our last word on avoiding Business Rescue is this. Unfortunately, in South Africa currently the formal Business Rescue process is more a legal one than a practical business survival one and lacks the maturity of for example the US Chapter 11 process. This seems to be changing, however we strongly advise you to act before formal business rescue proceedings begin, since:
- Your access to the business might become severely limited in this process.
- The chance of finding an Angel Investor practically vanishes there is plenty of cash begging to find good opportunities if you know where to look!)
- Creditors are far less forgiving and have much more power, although entering the process can be seen as a good faith attempt to meet your obligations as best you can.
- Most registered business rescue practitioners approach the rescue from a legal point of view (to be fair it is difficult not to), with creditors obviously having a large say in matters.
- There are conflicting incentives, despite the stated intent of the process.
- This is an expensive affair, and frankly, rushed. The time constraints and the binding obligations explicit in an approved plan, make people very conservative. (Your Business Rescue Practitioner, is required to deliver on the approved plan, and this plan has to be put together in 25 days.
Some useful links for you
TMA - South Africa - Turnaround Management Association of South Africa
TMA - Journal - Some Interesting Articles
PDF of the 2008 Companies ACT
Don't brood and ponder in isolation! - There's no harm in chatting
There are some very good Business Rescue and Turnaround people
in South Africa. The industry body has very good information and has a
list of Business Rescue Practitioners for you to review. Talk to a
of people at least. Do not limit your conversations. If you need to talk to us, even on week-ends,
please contact us. We understand the pressures you are facing, and if
talking to us on a week-end or evening helps you have a better night's
sleep, then that's something we have no problem in doing!