Independent Business Review

Who asks for an Independent Business Review?An Independent Business Review (IBR) is a process by which a financially distressed business can obtain an objective assessment of its financial condition and potential options for recovery from an independent third party. This process is typically initiated by the business owner, bank or investor who hires a professional to conduct the review and provide recommendations for addressing the financial issues facing the company.

The purpose of an IBR is to provide an unbiased, objective analysis of the business’s financial condition, including its current and projected financial performance, cash flow, and liquidity. The review may also include an examination of the company’s operations, management, and other factors that may be impacting its financial performance.

Based on this analysis, the independent reviewer will provide a report with recommendations for addressing the business’s financial challenges and improving its overall performance. The review can be used as a tool for negotiations with creditors, and to develop a plan for restructuring or turn around the business.

Who asks for an Independent Business Review?

An Independent Business Review (IBR) is typically requested by the owner or management of a financially distressed business. This may be a business that is experiencing financial difficulties such as cash flow problems, high levels of debt, or declining revenues. The business owner may seek an IBR in order to gain a better understanding of the company’s financial condition and potential options for recovery.

In addition to being requested by the business owner, an IBR may also be requested by other stakeholders in the business such as creditors, investors, or government agencies. Creditors may request an IBR as part of negotiations with the business to restructure its debt or as a condition for extending additional credit. Investors may request an IBR as part of their due diligence when considering investing in the business. Government agencies may also request an IBR as part of their oversight of the business or as a condition for providing financial assistance.

What information is required for an Independent Business Review?

Which details are necessary for an independent business review:

  • Current trading and financial position
  • Current balance sheet and risks to asset values
  • Profit and cash flow projections (if the company does not have these, they will work to produce detailed models for an extra fee)
  • Business and financial strategies
  • Business plan, marketing plan and management’s plans to deal with threats
  • Management ability, SWOT, and systems, possible management gaps, and possible improvements
  • Sensitivity analyses on all forecasts
  • Management ability, SWOT and systems
  • The marketplace and competition
  • Corporate and group structure
  • Bank security cover
  • Production of a statement of affairs for the likely insolvency outcome
  • Comparison of outcome for the bank or lenders, should the company enter administration
  • Likely that an external valuation will be required to support the SOFA production
  • Conclusion of the review with a recommendation to the lenders to either continue to support the management to restructure the business or to move to an accelerated mergers and acquisition process.

You can see that it will be a highly thorough study on the company, the industry, and the management. Although they will be expected to participate in the process, the management team may not be shown the final report section that provides the lender’s recommendations. The funder might hire administrators as a result of the report to safeguard their debt position. The business review company that conducted the independent business review may or may not be this administrator.

We may examine the choices during a free initial face-to-face meeting if you believe your firm or businesses may be in trouble, followed by a solutions report (for which we do not charge). This study looks at the positions of all the creditors and primarily determines if the company is insolvent or not. As a result, it can provide you direction and advise on your selections.

What happens after an IBR?

A written report that will often include a number of recommendations will be issued after the assigned accountant has finished investigating your business. This could result in the bank stopping your credit line, requiring additional safety precautions for any future borrowing (such as having you sign a personal guarantee), or even calling in the money you owe them and demanding that this be repaid.

Alternately, it can be advised that investigation be done; these tend to concentrate on a specific area that has been flagged as possibly problematic. In other instances, the IBR may raise significant concerns that could prompt the implementation of restructuring actions to protect the company’s future. Restructuring can take many different shapes, but it may involve renegotiating the terms of current debt, shutting down underperforming divisions of the business, or selling off excess assets.

Our services 

Management teams, boards, banks, independent funders, investors, creditors, and other important stakeholders including landlords and pension plans are just a few of our clients.

  • Short-term cash flow and funding reviews with ongoing cash flow monitoring and reporting
  • Limited-scope, fixed-priced Independent Business Review (IBR) solutions for small and medium-sized enterprises (SMEs) and lower mid-market companies
  • Full-scope IBRs -IBR process management and support for management teams in need of assistance during the IBR process
  • In-depth reviews of specific issues such as tax, debtors, supply chain risk, debt funding/structuring, or one-off business events -Reshape program including industry benchmarking, management interviews, and strategy planning workshops
  • Follow-on work, including stakeholder management, negotiations with lenders/stakeholders, and refinancing support
  • Contingency and exit planning, estimated outcome analysis preparation, and restructuring and insolvency support to implement or remedy the IBR’s findings.

Conclusion

In conclusion, an Independent Business Review (IBR) is a valuable tool for businesses facing financial challenges. It provides an objective assessment of the company’s financial condition and potential options for recovery. The review is typically requested by the business owner or management, but may also be requested by other stakeholders such as creditors, investors, or government agencies. IBRs are suitable for small and medium-sized enterprises (SMEs) and lower mid-market companies and can be tailored to specific requirements, whether it’s a short-term cash flow and funding review or a full-scope IBR.

Additionally, IBRs can be an essential step for business management teams in need of assistance during an IBR process, and can be used as a tool for negotiations with creditors, and to develop a plan for restructuring or turning around the business. It’s important to note that businesses seeking an IBR should seek out experienced and qualified professionals to undertake the review in order to ensure an accurate and objective assessment of their financial condition and potential options for recovery.

Insolvency & Restructuring Expert at Business Insolvency Helpline | + posts

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.