Deloitte Survey reveals internal triggers for business distress risks and restructuring in 2024
Insights gleaned from the 2024 Deloitte Restructuring Survey cast a revealing spotlight on the intricate dynamics of business distress triggers and restructurings, painting a nuanced picture of challenges and opportunities in Ghana’s corporate landscape.
According to the survey, conducted with input from restructuring professionals and C-suite executives, weak board governance, weak financial controls, and a high-cost base emerge as pivotal factors precipitating business distress.
This underscores the imperative for robust governance frameworks and prudent financial stewardship to navigate turbulent economic periods effectively.
Additionally, indicators such as actual missed debt service obligations, over-stretched trade creditors, and request for support by management were identified as catalysts prompting informal restructuring initiatives by businesses underscoring the need for proactive measures for addressing financial vulnerabilities and preserving operational resilience.
However, a critical hurdle identified in the restructuring process of businesses is the delayed recognition of distress, second only to the acute challenge of liquidity shortages. Timely detection of distress, the survey noted, is paramount for executing remedial strategies and averting detrimental repercussions for businesses.
Meanwhile, business executives in the country anticipate a surge in operational restructurings by businesses over the next 12 months, signaling a proactive stance among businesses in adapting to evolving market dynamics and fortifying their competitive footing.
In terms of recovery forecasts, the survey offers valuable insights into the prospects across various restructuring mechanisms. Notably, debt recovery rates are estimated at approximately 57% for liquidation, 52% for administration, and below 50% for alternative restructuring avenues.
These figures underscore the multifaceted nature of restructuring outcomes and the strategic imperatives entailed in maximizing recovery potentials.
The Deloitte Restructuring Survey furnishes a comprehensive roadmap for navigating business distress, delineating internal triggers, addressing challenges inherent in the restructuring process, and charting recovery trajectories.
Armed with these insights, businesses are better equipped to navigate uncertainties, implement judicious restructuring strategies, and optimize recovery outcomes in an increasingly dynamic economic environment.
