Predicting corporate failure

Article Abstract:

Business failures are often perceived as sudden events, when they are actually long-term processes. For most bankrupting companies this process has four distinct stages: (1) the firm acquires certain defects that are noticeable but do not yet affect its financial performance, (2) the defect-ridden firm makes a major error that could lead to failure, (3) the fatal error begins to affect the financial performance of the company (and other errors occur), and (4) the firm collapses. Frequently, management is at the heart of the failing company's problems. Most failing firms are run by autocrats, although lack of strong financial direction is one of the four factors failing firms have in common, the other three being: not enough diversified skills among the management team members, failure of the directors to actively participate in the firm's business, and chief executive officers who are also chairmen.

Corporate reorganizations, Business success

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Corporate rescue: a case study

Article Abstract:

A case study illustrating the advantages of a corporate rescue over bankruptcy is presented. Two procedures for rescuing a troubled company are company voluntary arrangements (CVAs) and administration orders. A CVA is an arrangement between firms and their creditors where the creditors agree to be paid over time. CVAs are inexpensive but offer little protection: but until the CVA is voted on, firms are vulnerable to any creditor presenting a winding-up petition to seize the assets. An administrative order puts a moratorium on the rights of creditors presenting a winding-up order without the approval of the court. When an administrative order is presented, an insolvency practitioner is appointed as an administrator to represent the firm and offer proposals to creditors. The moratorium gives the firm a grace period in which a rescue can be put in place or alternative proposals put forward.

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A planning role partners can play

Article Abstract:

Consulting services offer a potentially lucrative fee area for accountants. Many accountants feel that they lack the necessary expertise to offer consulting services, but most accounting partners are well suited to provide corporate planning advice. Corporate planning is a systematic method of identifying matters of strategic importance that a company needs to succeed at in order to prosper. Corporate planning is not to be confused with business planning. Nor should should strategic planning be used interchangeably with marketing. Obsession with marketing strategy has led many companies to ignore critically important areas of management such as employee relations, shareholder relations, and capital investments.

Methods, Planning, Services, Accounting, Accountants, Business consultants, Management consultants

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