Choose Your Path

Successful restructuring in times of uncertainty

Uncertainty is an inevitable element of business. The COVID-19 pandemic hit the world almost overnight, but even before this event, many industries faced looming downturns or disruptive changes. The electrification of the automotive powertrain, the rise of the Industrial Internet of Things (IIoT), and fundamental changes of consumer buying habits are just a few examples of such development disrupting many industries.

In these uncertain times, there are many lingering questions for corporate restructuring. Will banks need to be ready to take on more risk or will restructuring cases with uncertain perspectives require a stronger engagement of investment funds? Which challenges will become more acute for the management of distressed companies? And how should turnaround concepts and the restructuring process be amended to cope better with uncertainty?

These are the questions we address in this year’s Restructuring Report “Choose Your Path”. It is based on a survey of 150 restructuring experts across Europe, complemented by Oliver Wyman’s own analysis and published insights.

64% of banks surveyed will try to sell off their loans if they do not trust in their lenders in uncertain times

We found that there is often a clear correlation between a stakeholder’s ability to deal with uncertainty and their proximity to management’s decisions. Informing banks and other lenders better about the rationale and goals of a restructuring will improve their capability to understand and endorse the turnaround plan.

To achieve this, restructuring concepts need to put a particular emphasis on the market environment, the target picture for the turnaround, and the planned restructuring actions. Backward looking information is less important and digital tools do not help to set the right direction.

In this situation, it is important that top management displays a united front, shows confidence in the chosen target picture for the business, and works closely with middle management to execute the turnaround. This increases the odds for success even in uncertain times.


Choose Your Path