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Restructuring


„This CRO never comes empty-handed – with him comes hope.“ (Michael Leitl)

CONCEPT

When a company is in a crisis or has to handle in the short-term new management challenges which cannot be managed with the staff available, it can enlist the help of a crisis manager or chief restructuring officer (CRO). Such an individual is often brought into the company by banks or private equity companies.

EXTERNAL SERVICES

The CRO is given the task of restructuring and carries this out in his capacity as manager. Either taking over the role of CEO completey, until the task is fulfilled and a new CEO is appointed. Or adopting the role of assistant to the CEO in order to coordinate the restructuring.

The first tasks of the CRO include securing liquidity through short-term cost-saving, possible staff reductions, analysis of strengths and weaknesses, replacement of management, attracting new major shareholders, mitigation of legal position, strengthening the confidence of banks and company stakeholders. Restructurings require therefore more than just down-sizing and cost-cutting. It is a matter of managing the transition – the process of change through to the improved position – to the best of our ability.

TURNAROUND

When a company is in trouble, the CRO has to bring about the turnaround. In many cases, crisis management here is the vital first step to prevent the company’s demise. The aim is to completely restore the company’s viability.

EQUITY CAPITAL PROCUREMENT

An important task of the CRO is to find suitable financiers. This proves to be far more difficult for struggling companies as opposed to, for example, parent and expanding companies. Even in the case of a turnaround, there are a number of variations available for cooperations:

  • Option A: Together with the company management a restructuring concept is developed initiating the new phase of growth.
  • Option B: Commissioned by the owner, responsibility is taken over and carried through on a full-time basis at the company.
  • Option C: As a member of the supervisory board or administrative board, commissioned by shareholders.


REMUNERATION

The remuneration of the CRO is either entirely or predominantly based on success. Depending on the case, the premium can be up to 90% of the total fee. Shares, stakes or buying options can also be negotiated in the package.

OUTSTANDING PROJECTS

  • Takeover and restructuring of Spütz AG
    Supervisory board management
    From -35 million Euros to +75 million Euros through a complete portfolio wipe out
    Reduction in staff from 114 to 4 employees
    Cost-cutting programme of 68% in the first year

  • Restructuring and sale of Bankverein Werther
    Supervisory board management
    Saving licence via pillar strategy
    Turnaround, then 3 years of positive results
    Acquisition of strategic investors
    Sale of local business
    Exit to NTT Docomo

See also: Approaching investors


Where legal advice is required, transition-manager works closely with appropriately experienced law firms.

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