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Going Concern Forecast and Restructuring Report – IDW S6

Corporate crises often occur slowly and inconspicuously at first. They lead to a gradual decline in competitiveness, profitability and corporate value. As the crisis progresses, the pressure to act increases and the room for maneuver decreases. At the same time, the risk of insolvency rises. Early and comprehensive rethinking and intervention can limit or prevent lasting negative developments and initiate a sustainable recovery of the company. As a rule, external support during the restructuring process is a prerequisite for the sustained stabilization of the financial circumstances.

Initiation of a Going Concern Forecast

In the going concern forecast, it must be analyzed whether the circumstances - from today's perspective - make it predominantly likely that the company will be able to continue as a going concern in the next twelve months.

Reorganization expert opinion according to IDW S 6

The objective of a restructuring report is to assess the possibility of restructuring a company in a crisis. Both the competitiveness and the profitability must be regained through suitable restructuring measures in addition to the going concern forecast.

In order to be able to answer these far-reaching questions in connection with the ability to restructure, IDW S 6 defines core requirements for restructuring concepts, which are typically dealt with in a restructuring opinion:

  • Description of the Subject Matter and Scope of the Order
  • Basic information on the economic and legal background of the company in its environment, including its net assets, financial position and results of operations.
  • Analysis of the crisis stage and the causes of crisis, including analysis of whether there is a risk of insolvency
  • Presentation of the mission statement in connection with the business model of the restructured company
  • Measures to overcome the corporate crisis and avert the risk of insolvency
  • Integrated Business Plan
  • Summary assessment of the ability to restructure

Depending on the severity of the corporate crisis, various focal points can be set within the framework of a restructuring concept.

Implementation process following the creation of a restructuring concept

Restructuring and reorganization processes often do not end with the preparation and submission of a going concern forecast or a restructuring report. This is followed by regular negotiations with financing partners, employees, suppliers and, if necessary, other stakeholders, as well as a wide range of communication measures.

The preparation of restructuring concepts is usually followed by the implementation of the identified measures. In this phase, the planned measures are broken down into subtasks, and persons are assigned responsibility. Within the framework of project management, it is necessary to establish progress monitoring and reporting, which is regularly used for external communication with stakeholders.

In the implementation process, we support our clients from a business perspective on the basis of our comprehensive methodological know-how in the field of project management. Through our expertise, we help to ensure that conceptual measures also become effective in a timely manner. On request, we also provide interim management capacities for the implementation process.

If you are interested or have any questions, please contact us.

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 Dr. Rainer Doll Partner