Turnaround

Professional help also in difficult times

The monitoring of client companies’ financial and operational situation is part of Finnvera’s risk management. If financial problems are observed, their causes are investigated together with the client and other financiers. This is referred to as “turnaround”.

Finnvera’s aim is to respond to any weakening in the client enterprise’s situation as early as possible in order to secure viable business and Finnvera’s own claims. If the enterprise’s normal development measures do not produce the desired results, it is justified to consult outside professionals. Finnvera’s own turnaround experts assist clients in seeking help.

In the best of cases, turnaround means that the enterprise solves its financial difficulties and continues its operations profitably and competitively. For Finnvera, successful turnaround means smaller credit losses. Rapid and expert turnaround is also useful for society: it can help the company to avoid the possibly impending bankruptcy and loss of jobs.

It must be accepted, however, that not all client enterprises can benefit from turnaround, especially if the problems have not been addressed early enough. In a difficult economic situation, it is particularly important to ensure that the enterprise’s own reporting is reliable and up to date, and that its operations are predictable.

The extended economic recession may, for example, have led to situations where the client enterprise is able to pay the interest on its loans but cannot make any investments, develop its operations, or internationalise. The enterprise is also highly susceptible to various external disturbances, such as a rise in interest rates. If the enterprise has been able to secure its equity and the turnaround plan is realistic, Finnvera, together with other financiers, seeks financing solutions for enterprises forging ahead.

Enterprises are expected to show initiative of their own: the enterprise and its stakeholders must be committed to the measures agreed. Turnaround is often done with the advice of competent, experienced consultants, experts in financial administration, and lawyers.

Technically, turnaround is generally implemented using either voluntary turnaround or official restructuring, as referred to in the Restructuring of Enterprises Act. Sometimes the only alternative remaining is bankruptcy, but even in these cases the viable part of the business can often be sold to a new owner.