Restructuring Update - issue Q3/2024

In recent months, the number of companies in Germany facing a serious crisis has increased once again. The press has reported on prominent companies that have filed for insolvency. However, there are also numerous companies that are on the verge of insolvency and are not known to the public. In the current issue, we focus on this topic, among others, and shed light on how the reorganisation of a company at risk of insolvency can be approached and which success factors are particularly important. Among other things, the creation of an external project management office (PMO) plays a role here. The implementation of a PMO can increase the likelihood of successful reorganisation and transformation. We have analysed for you how implementation can succeed.

Further topics:

Property prices and demand are strongly influenced by macroeconomic factors such as interest rate trends. The rise in the European Central Bank's key interest rate to up to 4.25 per cent in 2023 has increased financing costs. At the same time, sustainability aspects and adaptation to demographic and social trends are becoming increasingly important, which influences the long-term value of property. The strategic realignment of property projects, particularly in the office market, requires consideration of ESG criteria and a user-centred approach.

Increasing cost pressure and the end of "cheap money" have emphasised the importance of liquidity and working capital management, especially for private equity companies. The challenges in this area are particularly great for medium-sized companies, which often work with outdated IT systems and manual processes, which impairs data quality and transparency. In addition, decentralised and non-standardised processes make it difficult to create synergies and increase efficiency. Effective liquidity planning and working capital management are crucial for avoiding liquidity bottlenecks and strengthening resilience.

The relationship between property project developers and financing partners is strained, as financing partners increasingly insist on the submission of restructuring concepts in times of crisis. These concepts are crucial for the granting of further loans. The challenge is to clarify which concept is required. This is partly due to the positive development of the property sector over the past ten years, when such requirements were rarely made. In addition, many banks have downsized their restructuring departments, which has led to a loss of resources and expertise. In practice, this means that a going concern concept is often sufficient. The creation of such a concept requires a detailed analysis of the initial economic situation and customised planning in order to secure financing until the project is completed.

The quarterly Restructuring Update offers you solutions to issues relating to turnaround, reorganisation, insolvency and distressed M&A. The authors categorise new developments and point out options for action.

Download the  KPMG Restructuring Update, Ausgabe Q3/2024, now and benefit from the insights of the restructuring experts.