Corporate reorganisation, crisis management
The corporate crisis is at the beginning of an often inrecognizable, creeping process, which only becomes visible at an advanced stage in profit and loss accounts, balance sheets and available liquidity. The Institute of German Auditors (IDW) distinguishes between five stages of crisis:
A stakeholder crisis is often the beginning of corporate crises. Management and supervisory bodies disagree on the way in which management is conducted at such stages. Necessary decisions may not be taken, belatedly or insufficiently.
The strategy crisis always leads to serious consequences of future company success. This does not always have to be preceded by a stakeholder crisis. A non- or Insufficient reorientation of an enterprise usually leads to the loss of competitive advantages and structural deficits in the enterprise.
In a subsequent product and sales crisis, the signs of the crisis become visible. This phase is usually characterized by declines in sales and sales, which often lead to underemployment, inventory building and worsening fixed cost utilization through countermeasures taken, as these measures usually only take effect in a delayed manner. If the product and sales crisis is not only temporary and the countermeasures that may be taken cannot cushion the reduced capacity, it inevitably leads to a crisis of success. The declinein profits worsen the company’s earnings and, in the worst case, deplece equity in the event of losses.
“If” the company not only produces short-term losses and there are no significant reserves, the liquidity crisis is finally reached. In this phase, the existing liquid assets are depleted or debt is rising. These two points are ultimately decisive as to whether and when insolvency risk is to be diagnosed for the company (insolvency reasons).
It is important to recognise that, in the crisis stages, there is a link between the scale of the crisis (which increases as the crisis progresses) and the scope for entrepreneurial action or possibilities for counter-control (these decrease drastically over time).
Our consultants have experience in identifying causes of crisis at all of these stages due to their many years of cross-industry expertise. There are available for specially developed key figure systems with corresponding threshold values.
If a crisis is recognizable in your venture, our consultants can work with you to develop a plan that will lead to the crisis. The plan and its actions are based on the crisis stages explained. If the crisis is so advanced that there is a risk of insolvency, we can support us at this stage together with our partner network.
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