Restructuring remains a key focus for Irish business

An overwhelming majority (87%) of Irish businesses have become more viable as a result of restructuring initiatives. The majority (70%) of companies are planning further restructuring activities in the year ahead despite such business reorganisation remaining a significant challenge for most (84%). These are some of the key findings from PwC's Business Barometer on restructuring carried out in early February 2012.

Speaking at the launch of the Business Barometer, Brian Bergin, Restructuring Partner, PwC, said:

"The survey confirms that Irish businesses have undergone significant restructuring in the last few years with even more restructuring planned in the future. While much of the restructuring to date has been operational in nature, the funding side of the business is coming more and more into focus as businesses strive for stabilisation."

Brian Bergin continued; "The key challenge for successful restructuring, according to the barometer, is achieving team buy-in. There is no doubt that excellent people engagement is critical for successful restructuring and for the benefits to be sustainable."

Other key findings included:

• The survey confirms restructuring success with 70% of participants reporting overhead reduction as a clear benefit. Other confirmed benefits were stabilisation of the funding structure (38%), margin improvement (33%) and improved staff productivity (25%)
• Nearly three-quarters (69%) of this restructuring focused primarily on operational restructuring. Less than a third (31%) focused primarily on financial/ debt restructuring
• The single key barrier for successful restructuring is people buy-in (38%). This was followed by available funding (18%) and bank/lender engagement (15%)
• Streamlining processes (60%) is by far the most popular restructuring activity being planned in the year ahead. Other such initiatives in the year ahead include headcount rationalisation (48%), debt refinancing (35%) and business consolidation (25%)
• Restructuring did not result, for the most part, in any arrangements or compromises with suppliers (70%) or in an insolvency process (87%)

Declan McDonald, Restructuring and Insolvency Director at PwC concluded:

"We are seeing more companies seeking to restructure their debt and balance sheets. In many cases corporate debt has become unsustainable and hence the requirement to restructure. To do this any business should ensure that it is in good shape operationally prior to looking for any debt restructuring agreement with its lenders and prepare a realistic plan demonstrating the future viability and debt capacity of the business."

ENDS

Notes to editor:

The PwC Barometer on Restructuring was conducted in the first week of February 2012 and participants included key decision makers across a range of companies including financial services companies in Irish business.

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