Business rescue experts and insolvency practitioners (IPs) come in all shapes and sorts. When you need additional support to help you through the business challenges, it is very definitely not a case of one size fits all. You need the right adviser, not just any old professional.
Here are some pointers on finding the right Insolvency Practitioner for your business:
1. Is the Insolvency Practitioner a listener or a lecturer?
There’s a lot to share with a potential adviser and for them to take on board. They need to be in receive mode from the very first meeting, not transmit.
2. Are they flexible?
There is nothing about diagnosing the financial and commercial problems at a business that lends itself to a ‘tick box’ approach. The challenges at every business are different, as can be the solutions. The approach of the adviser needs to take all of this into account.
3. Can you understand what they tell you?
Like many industries, insolvency is a fiendishly complex world, full of acronyms and buzz words and with a technical language all its own. Can the potential adviser relay information in simple, business language as to what your options are?
4. Do they and their team know your business sector?
Insolvency practitioners and their teams are often jacks of all trades, with experience and successes in dealing with issues right across the economy. Nevertheless, some knowledge of your sector can help and in some instances, it is absolutely essential. This is especially so where there are detailed regulatory or legal considerations to either keeping a troubled business running in an insolvency process like Administration, or when finding a buyer for it. Care homes are one example; travel is another, as is any businesses in the financial sector that are regulated by the FCA; what are their requirements for an IP to be engaged?
5. Is the only option an insolvency solution?
Not every business rescue has to go through an insolvency process, which in many instances will destroy value for some or all of the stakeholders. There are many alternative restructuring solutions outside a formal insolvency, some of which could be appropriate for your situation.
6. How well resourced are they and how busy?
The insolvency profession is surprisingly small, with fewer than 1,600 people authorised to be appointed to formal insolvency cases. They have support employees, but the capacity of the market has shrunk in recent years.
With a strong possibility that there will be a surge in business failures this year, a potential adviser must be asked about their manpower resources and how busy they currently are. You are entitled to their full attention and should never be the one out of their multitude of spinning plates that crashes to the ground.
7. How much involvement in your case will the IP actually have?
It makes a business rescue very expensive if one of the few authorised UK insolvency practitioners does all the work on your case. It should be a team effort using appropriately qualified employees at different levels and different cost rates. Even so, you are entitled to ask up front that the IP you meet and negotiate with will stay involved once you have signed up, especially in setting strategies and keeping a watchful eye on what their teams are doing, not to mention managing your expectations. It should never be a case of ‘sell and disappear’.
8. How much will it cost?
Estimating the cost of any business rescue process is incredibly difficult, whether it is a restructuring or a formal insolvency. There are so many unknowns, so many moving parts. But all reputable firms will provide details of their cost rates and their best estimate of the likely bill, once they know the broad shape of what they will be dealing with, based on assumptions they should spell out.
However, this depends crucially on them being told all the significant facts surrounding the rescue project. If the IP has not been warned up front, nobody should expect an IP to write off the cost of dealing with that issue.
9. Can you work with the IP?
Over and above these considerations, there will always be less tangible factors in making a decision about which IP to choose. People skills will play a big part. You don’t have to love your IP, but you need to judge whether you can have an adult conversation with them about the inevitable difficulties and conflicts of interest that can arise and believe you will get an answer you can live with.
10. An important warning sign
And one final, important point. If the prospective adviser turns up to the first meeting with an engagement letter already filled in for you to sign, the answer is a straight forward ‘no thank you’. That reeks of a snake oil salesman, not a trusted adviser.
If you are concerned about the position of your business and believe that it would be beneficial to speak to an IP in an advisory capacity, one of our Partners would be more than happy to have a non-obligatory confidential chat with you. We can be contacted at rescue@opusllp.com or call us on 020 3326 6454 and we will arrange for a call with one of our Partners.