The FDs’ FD: What can you sell?

Margaret Ewing, Deloitte

Hoping for the best is not a strategy. You need to be prepared to act
definitively to control the situation.

Last month I urged you to be more proactive in terms of communicating with
your banks to help your company appear more credit-worthy and improve your
negotiating position. This was one of the ways in which an FD can ensure the
company is taking control of the situation. Another way, if all else fails, is
actually selling.

In previous recessions, high performing companies did not hold on to losers.
They stuck to their strategies of disposing of assets even when pricing power
may have waned.

You may also be in this situation ­ or you may need to sell to realise cash
just to stay afloat. If the latter you will need to move fast, which means doing
all the things you normally do during a sale, but with a heightened sense of

Disposals typically take six to nine months. But in this climate, a deal is
less likely to close the longer it takes and the more complicated it gets.
Buyers are looking for value. The longer it takes to strike a deal, the more
pressure builds on you to make sure the business retains its value and the more
the buyer is likely to seek to re-negotiate terms and reduce the offer price.
The faster you move, the easier it is to leave some value behind for the buyer
so that you can close the deal.

How fast does this need to be? Think 60 to 120 days.

During that time you will need to stay in close contact with your
stakeholders. Capital providers and suppliers are probably the most important.
You can not let things get worse as you negotiate a sale. You will also need to
keep your board in the loop. Stay in constant contact as you look at options for
quick asset sales and possible disposal structures (eg joint ventures or
mergers, where the buyer may also not have ready cash for the initial

The bottom line is that selling may be more of a requirement than a choice.
Make sure you stay abreast of your financial situation at least weekly. Know
what your cash flow needs are likely to be in three, six and nine months. And
understand what assets could be sold quickly, and the implications of such sale
. A real-time, no-nonsense understanding of upcoming needs should guide your

Margaret Ewing is a partner and vice-chairman at
Deloitte and former CFO of BAA

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