The Situation – Restructuring on One’s Own Carries High Risks
The experts at HANSE Consulting, a sister company of HANSE Interim, had developed a restructuring concept in accordance with IDW S6—taking into account the requirements of the Federal Court of Justice (BGH)—for a medium-sized family-owned modular construction company, complete with a comprehensive action plan. Although the liquidity plan still indicated sufficient liquidity—no (imminent) insolvency—for the restructuring, but restructuring on its own appeared so risky that the shareholder commissioned HANSE Consulting’s M&A experts—in parallel with the implementation of the restructuring plan—to explore the sale of the company (“dual track”). A Northern European conglomerate ultimately acquired the company.
As is so often the case, the purchase price was negotiated at length and in detail, but no integration plan was developed. Unfortunately, the buyer had provided neither the expertise nor the resources for the company’s post-merger integration (PMI) and had left the acquired company almost entirely to its own devices.
This led to a negative EBIT and the CEO’s voluntary resignation, as he did not feel capable of ensuring the company’s successful integration into the group. To minimize the potential damage resulting from this situation, the idea of engaging professional interim management quickly emerged. Consequently, HANSE Interim was initially brought in to provide an interim CEO for the PMI.
The Challenge
All the processes and structures that the group had already established at other subsidiaries—and expected to find here as well—were missing. No turnaround strategy, no inventory management system, no forecasting procedure, no integration with the group’s headquarters, lack of certification, inadequate internal processes and communication, and an IT landscape that was set up completely differently from the rest of the group. Essentially, the German subsidiary was a disorganized “black box.”
Due to the poor results, the possibility of another sale and withdrawal from the German market even came up for discussion. Only an experienced restructuring manager (CRO) with PMI and corporate group experience could help here.
The following tasks had to be completed within a very short time:
• Leading the organization through the turnaround process
• Optimizing processes and workflows in the business operations to be stabilized
• Initiating the implementation of a strategy aimed at achieving 50 million euros in revenue and a 10% market share
• Preparing the annual financial statements and conducting discussions with auditors
• Rolling liquidity planning and management
• Risk management, project management
• Sales and fleet management
• Internal audit
• ERP implementation
• Supply chain management
• Digital Transformation Projects
• Optimization of Personnel and Operating Costs
• Certifications
• Implementation of required “business principles”
• Budget planning, forecasting, and investment forecasting
The Result
Using the HANSE Consulting restructuring concept, the interim manager had a comprehensive roadmap for increasing the company’s operating profitability. A classic and effective turnaround management process was set in motion. Revenue was profitably increased by 36% during the integration, and significant, sustainable cost savings were achieved in the short term.
After ten months, the interim manager was able to hand over leadership of the company to the CEO, who had been rehired in the meantime. The company was back in the black, and the team was motivated to move forward. The possibility of selling the company again was off the table, and the company was fully integrated into the corporate group.
Conclusion
The PMI under restructuring conditions was successful, and the new CEO was able to build on a solid foundation. The results speak for themselves! But the case also demonstrates how important it is to give timely consideration to integration as early as the sales negotiations, in order to truly realize the hoped-for synergies with the right management team.
