Restructuring is a key word of a financial advisor during the last years. Due to strong macroeconomic changes, which have led to a sharp increase in the interest rates in Russia, many bankers and creditors will face a hard choice either to bankrupt a borrower, or negotiate new terms and conditions for outstanding loans.

 

If a banker thinks the chances of a company to survive are slim, his position will be tough and strict. His task will be rather straightforward that is to take control over pledged assets and sell them (possibly to your competitors) as soon as possible for a maximum price. However, in a bad market it is a hard task to sell assets for a decent price. Therefore, if your creditor believes that keeping your business afloat may bring bigger “dividends”, he will be ready to agree to certain degree of a climb-down. That is, provided he keeps status quo of your creditor: you do not dictate new conditions, but ask for a concession.

 

Hence, do not lose time, commence negotiations about decrease of the interest rate and prolongation of the credit facility life now, even if your business is not hit by the crises as yet. Start approaching new banks to see if you can refinance your loans on better terms. Yes, even in crises, there are banks that seek good clients exactly in times of turmoil, otherwise it would be hard to get you.

 

Think about merging your business with one of your competitor or buying his business. In times of liquidity crunch in a debt market, there are quite a number of investment funds ready to finance M&A deals. In general, merger of business helps to reduce general and administrative expenses and increase market share. That, in turn, leads to better negotiation position with suppliers and buyers. Therefore, you may hit two targets with one stone, improve your business profitability and negotiation position and hence terms of loans with lenders as well.

 

Well, whatever you decide to do improve your business financial position, do not forget about the experts.