Mergers, turnarounds and problem loans share similar imperatives; they are extremely tense situations requiring deft leadership, constant communication and adherence to a carefully developed plan. IdeaBridge consultants have over 20 years of battle-honed experience in mergers, turnarounds and problem loan situations.

Problem Loans and Special Assets:
Working collaboratively with Special Assets, the Borrower, major customers and major suppliers, we develop a detailed 100-Day Action Plan with timelines, milestones, accountabilities and detailed financial forecasts that will measurably:

• Reduce Bank debt
• Increase profitable sales
• Maintain or increase margins
• Decrease inventory levels
• Reduce A/R
• Generate cash

We develop a realistic Plan of Action that will show how debt will be quickly reduced. Measures consist of: improved operational efficiency, reduction of inventory, increased sales and, if necessary, elimination of redundant operations, non-essential staff and other assets, including all corporate toys and perquisites.

Our Problem Loan Discovery Process:
1. First, we meet with the Bank to develop a detailed understanding of their issues and concerns with the Borrower. We’ll also inquire about efforts to refer the Borrower to an alternative lender, as in most cases, this may be the quickest solution.
2. Next, we meet with the Borrower to explore the root cause of the problems and to determine if a solution can be developed to fully address and mitigate the Bank’s concerns.
3. We’ll assess the leadership team to determine if they have the skillset and the backbone to make the tough decisions necessary to ensure immediate improvements. Determine if anyone on the management team has the credibility and skill to lead the execution of the 100-Day Action Plan.
4. Make recommendations for the removal of those individuals that are an impediment to a timely turnaround, including actual removal and replacement of the failure team, if necessary, to restore the Bank’s confidence.

Developing our 100-Day Loan Repayment Plan:
1. We’ll quickly develop a detailed 100-Day Action Plan that will identify, weed-out and eliminate all non-performing and redundant business units, products, departments, projects, programs and people. The Plan will result in measurable improvements and debt reduction on a written, scheduled basis.
2. Then we’ll restore credibility with the Bank by taking swift, decisive action to pay down the debt and keep the Bank involved every step of the way.
3. We create a sense of urgency and quickly build momentum by acting as the catalyst to remove all obstacles toward recovery. We’ll keep the management team consistently focused on the key business levers that will result in the quickest improvements to cash flow and debt reduction.
4. We’ll create a debt reduction plan that demonstrates the Borrower’s ability stay within their borrowing base. We’ll work to rebuild the Bank’s confidence through: a) honest and constant communication; b) full and timely disclosure of financial results and any significant developments; and c) rapid debt reduction according to the agreed repayment schedule.
5. We work to improve productivity at all levels within the company, beginning with establishing prompt financial reporting to the Bank; daily if necessary.
6. We meet with the Bank at regular intervals to review the progress at meeting our defined objectives according to the written milestones and deliverables in the 100-Day Action Plan.
7. We pay particular attention to the sources and timing of cash flow from A/R to ensure that there is sufficient cash to make weekly payrolls, reduce the Bank debt according to schedule and meet continuing operating cash needs while paying trade creditors.
8. We’ll initiate meetings with key strategic suppliers to negotiate extended payment terms and we’ll develop an accounts payable triage system for all other non-vital suppliers.
9. We dissect the inventory situation to determine how many days supply are on hand, what’s moving, what’s not moving, what can be returned to suppliers and what can be sold immediately to free-up cash.
10. We review all personnel costs to determine where and how cuts can be made without a detrimental impact to the core business.

Turnarounds and Crisis Situations:
We enter situations that are difficult and sticky. Systems are broken, people are angry, vendors are screaming and lenders are impatient. Dire situations require immediate and definitive action. We quickly size-up the situation and issues, bring people together and refocus the business on the key levers to stop the downward spiral; we redirect the momentum toward a successful outcome. Our emphasis is on getting quick, measurable results by working closely with all the stakeholders.

We believe that it's irresponsible to arrive at a strategic recommendation in advance of the facts; therefore, we rigorously analyze the situation prior to developing the turnaround plan. We quickly develop a comprehensive fact-base that illuminates the key issues for us, management and all key stakeholders. Then, working together, we develop a reasonable turnaround plan that leverages the remaining assets and resources of the company to quickly drive results.

Crisis Management:
If the situation has already escalated to a clear ‘crisis mode’ by the time we’re brought in, then we’ll rigorously analyze all aspects of the business to quickly identify:

• non-core operations
• non-performing product lines
• excess and/or idle equipment
• slow moving inventory
• hidden value in real estate and other assets
• non-essential real estate, plants and leases
• all other readily-salable assets that can be quickly converted to cash to pay-down Bank debt
• potential buyers of the business, the assets, the trademarks, the patents and any other saleable ‘off balance sheet’ assets we can find.

Working with all the stakeholders, we’ll quickly develop a Plan to liquidate these non-core assets. The Plan will include a realistic timetable for realizing the cash proceeds of these sales, the P&L impact of the sales, and the resulting impact on the balance sheet from the sale of these assets and the reduction of Bank debt.

Mergers:
Due to inadequate planning and lack of preparedness, mergers rarely live up to their CEO's expectations; our process can change all that. While the greatest chance of merger success lies in pre-merger feasibility and due diligence assessments, once the merger has been completed we can also help you maintain focus in the following merger imperatives:

• determining and communicating a crystal-clear strategy and direction for the company;
• coordinating and managing the transitional process in a rapid manner;
• communicating and leveraging the new cultural standards and realities;
• designing the way work will get done in the new, combined business;
• how to quickly gain control over the new merged entities;
• repelling the attacks from vultures feeding on your vulnerable customers and employees.

Our integration methodology involves a careful assessment of the cultural issues and how to get people on board with the program. Our integration process explicitly focuses on capturing the projected merger benefits (people, assets, cost-efficiencies, revenue and cost synergies). We plan for rapid integration, stabilization, short-term wins and buy-in from customers and employees. We demand quick integration and believe that a drawn-out process is the least effective and most dangerous.

Please see our many White Papers on the topics of Mergers and Merger Integration.

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