Beyond Voluntary Administration: Turnaround Blooms as Business Failure Booms

Today, Australian businesses find themselves in a fraught landscape of rising interest rates, escalating costs, and subdued consumer demand. These factors, coupled with failures across supply chains, have exposed vulnerabilities and are testing the resilience of even the most established Australian businesses.

Household names like Bonza, Porter Davis, and Godfreys have recently disappeared – along with 10,000 Australian businesses in financial year 2024. And these numbers continue to rise – with construction, retail, hospitality, and transport feeling the brunt.

Business conditions are such that anything short of razor-sharp financial management, margin control, and pinpoint strategy are buckling businesses. While once-typical speedbumps like a contract loss or legal challenge are becoming increasingly lethal blows.

There’s no escaping that conditions are tough for Australian business.

But as business failure booms, turnaround blooms.

Banks are supporting robust turnaround strategies. Private financiers are offering flexible solutions that cater to specific business needs – be that restructuring liabilities to injecting capital for growth or change initiatives. Negotiating favourable terms, cutting costs, and bringing in specialised talent are reinvigorating businesses willing to take proactive steps towards renewal.

For businesses seeking to preserve shareholder value and avoid Voluntary Administration (VA) – turnaround options are available.

Analysis by Rebound Advisory found that where early warning signs like declining sales or forecast deficiencies are addressed with a formal turnaround plan, 70% of businesses will not only survive but come out stronger. And even where things are left to the eleventh hour and Voluntary Administration is seen as inevitable, 1 in 5 businesses are suited to an informal turnaround.

In both situations, shareholder value is preserved, control in maintained, reputations are managed, and costs are minimised.

As a business owner, adviser, or financier, early intervention will always be the best path for stabilising operations and laying the foundation for sustainable growth and resilience. However, even where things appear terminal, a second turnaround opinion will give you a 1 in 5 chance of preserving livelihoods and legacies.

At Rebound Advisory, our deepest satisfaction comes from the resurgence of a business facing undue hardships. We are driven by the profound impact of revitalising a company, often one built over many years, that has found itself in distress due to factors beyond its control.

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