If a stakeholder, bank or lender is concerned that a company is distressed or facing insolvency, they may request an Independent Business Review (IBR). As the name suggests, this is a review of a company’s finances and business structure that’s carried out by an independent third party with no connection to the business. Typically, an IBR is carried out by an insolvency practitioner or a business turnaround specialist.
Why Ask For An Independent Business Review?
An IBR will most commonly be requested by banks or lenders who are concerned about the state of a company, or are struggling to gain the information that they need from them. The independent business review provides an indication of how stable the business is and what its forecast for the future looks like. The review assesses the value of the business, highlighting any concerns that could present a risk for the company, and therefore its lenders and stakeholders. Although usually requested by external stakeholders, IBRs are very useful for helping directors identify the strengths and weaknesses within their company.
What Does An Independent Business Review Look At?
An independent business review looks at several areas to assess the company’s stability and future. This includes, but is not limited to, the following areas of focus:
- The company’s current financial position: Looking at the balance sheet, focussing on the value of assets and recoverability of debts e.g how quickly the company makes repayments.
- Profit & Cash Flow Forecasts: Assessing the future stability and profitability of the company in order to assess future risk for lenders and directors.
- Marketplace & Competition: Looking at the business’ position in the market and how it compares to its competitors, and where it may be underperforming, or succeeding.
- Management Ability & Systems: This will include a SWOT analysis of the business, as well as assessing where there might be gaps in management performance.
Company directors will need to co-operate and supply any information and records requested for the purposes of the review.
What Happens After An Independent Business Review?
Once the review has been completed a report will be written. The independent business review report contains recommendations for how the lender and/or company should proceed. It’s important that the company is serious in implementing the recommendations in order for the lender to continue their support. Not to mention, it’s usually an existing point of concern that triggers the review being requested in the first place. An independent business review may highlight the need to look at restructuring/rescue plans for the company.
Need to request an independent business review? Our dedicated team at Ballard Business Recovery are experienced in helping lenders and charge holders ensure their security. We have extensive experience of delivering independent business reviews as well as LPA or Fixed Charge Receivership, administration appointments and administrative receiverships. Please don’t hesitate to get in touch with us to discuss your requirements.
