Turnaround Advisory

Macroeconomic shocks, financial distress, increased competition, new industry entrants, substitute business models, new technologies and reduced access to capital resources may impair previously viable business strategies and call for holistic structural change to be delivered at speed.

Turnaround is the process by which a company addresses elements of underperformance to restore cash flow, profitability and the balance sheet, often in distressed situation and time-pressured situations.

Besides time pressure, turnaround situations are characterized by varying interests of a wide range of internal and external stakeholders, including management, shareholders, lenders and regulators, reinforcing the need for a robust value restoration plan.

Turnaround solutions typically involve elements of crisis management, cash stabilization, operational and financial restructuring. These steps may not necessarily be sequential and it is key for a successful turnaround to run multiple workstreams in parallel, adapting to the requirements of a rapidly evolving situation.

Additionally, turnaround management is broader than finance alone. A strategy refresh, target operating model realignment, legal and tax considerations are often key to a sustainable solution.

KPMG in Vietnam and Cambodia provides full-service of business turnaround strategies support, bringing together cross-functional specialists to work with all levels of management to engender and implement decisive plan.

• A major industrial company was facing financial distress as a result of low oil prices, the COVID-19 pandemic and forced extraction from a number of key markets.
• Additionally, aggressive investments in new businesses to diversify the Group’s geographical footprint and product portfolio without consideration of financial business cases had adversely impacted the Group’s profitability.
• Following multiple years of deterioration in financial performance and liquidity, the board engaged KPMG to identify key drivers of underperformance and opportunities for turnaround and financial restructuring.

• KPMG formed a global team of financial restructuring, cost optimization, turnaround and industry experts. We conducted detailed reviews of the Group’s profitability, cost base and working capital.
• Our review was fully empowered by data analytics to rapidly drill down into segment, region, entity, product and customer level. Simultaneously, the team reviewed the Group’s capital structure and strategic business plans to formulate a holistic turnaround roadmap.
• The Group had significant data challenges due to a collection of local ERP systems from historic acquisitions. To conduct our review at the required speed, we used advanced analytical tools to deploy creative solutions with unstructured data.
• Findings were presented via a dynamic and comprehensive dashboard which pinpointed subscale entities as well as underperforming business segments. These dashboards provided the client with thorough visibility into their business and key areas for improvement.

• We devised a holistic turnaround plan for the Group to return to profitable growth.
• We identified a range of opportunities to improve customer profitability, the cost base, the organizational structure, the capital structure and working capital management.
• We received significant appreciation from both the Board and Management for our well-substantiated analysis and thorough insights. We subsequently helped the client to implement the turnaround roadmap.