The Rising Need for Business Emergency Doctors: The Importance of Specialists in Rescuing Companies

Nicolas Guyamier is still amazed. A few weeks ago, this boss of a family group of road freight transport near Bordeaux was negotiating the takeover of an SME in his sector. “It has the same problems that I experienced ten years ago: a surge in its energy costs and a technical inability to re-invoice them correctly to its customers”, observes this young entrepreneur of 37 years old. Luckily for him, his own story ended better. After a receivership in 2014, followed by a ten-year continuation plan, his company returned to a healthy situation faster than expected. “Alone, I wouldn’t have made it,” admits this rugby fan. In addition to a judicial administrator, Sébastien Vigreux, present throughout the operation, he also benefited for a few months from the advice of a transition manager in finance, Véronique Leblanc-Tridat, who came to support him in reorganizing his management. “Might as well take advantage of the expertise of the experts.”

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After such a result, we understand better why his company recently seduced the jury of the Ulysses Prize, awarded by the Association for the Turnaround of Businesses (ARE) to the prettiest rescue of the year. “For twenty years, we have been trying to convince companies that their difficulties are not all insurmountable, if they rely on specialists to help them”, explains Benoît Desteract, its president. According to his estimates, this brotherhood is not numerous. About 800 in France, including 300 members of the ARE. Lawyers, financial advisers, judicial administrators, consultants, crisis managers, communicators or investors. Everyone has their own specialty in keeping their customers’ heads above water. Lately, it’s not the work that is lacking.

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After two years of calm due to the massive support of the public authorities during the pandemic, company failures (recoveries and liquidations) jumped by 50% in 2022, to amount to 41,303 according to the Banque de France. The trend is similar in the first months of 2023 with breakage, particularly in the hotel and catering industry, construction and trade, even if pre-Covid levels (around 55,000 on average) have not yet been reached. . “The problem is the future reimbursement of PGEs, loans guaranteed by the State during the health crisis, analyzes Jean-Pascal Beauchamp, director of the financial restructuring activity at Deloitte. This money was used to overcome losses, not to invest. Not to mention the current economic situation weighed down by inflation and the rise in interest rates which signal the end of free money. This does not facilitate the chances of rebound.

“Emergency” experts at the bedside of indebted companies

Companies in debt, a fragile activity, uncertain tomorrows. So this is the daily lot of our business emergency doctors. Obviously, not everyone fights in the same category. Over the years, some have acquired greater notoriety, their names (and that of their law firm) appearing regularly in the biggest files, which are often also the most complex and the most mediatised. This is the case, for example, with judicial administrators involved in proceedings, whether preventive (ad hoc mandate or conciliation) or judicial, when the situation is more serious (safeguard or recovery).

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Of the approximately 150 in practice, two mainly emerge: Hélène Bourbouloux and Frédéric Abitbol. In recent times, the first has taken care of companies as well known as Celio, Flunch or, at the moment, Orpea retirement homes, while the second was in charge of Pierre et Vacances Center Parcs, Rallye or, more recently, Kaporal jeans. The situation is somewhat similar among the auditors responsible for urgently establishing a diagnosis of the situation of sick companies, with Cédric Colaert (Eight Advisory), Barema Bocoum (KPMG) or Rodolphe Pacciarella (Accuracy).

Among crisis managers, all former executives or high-flying consultants, called for help by shareholders to temporarily take control of beleaguered companies, Arnaud Marion and Patrick Puy have ended up in recent years becoming media figures by dint of to wrestle with “hot” files with a firm hand. Others less exposed like Michel Rességuier (Prospheres) or Michel Maire (D&I) are also renowned in their community for their efficiency.

On the lawyers’ side, the names of restructuring specialists are more numerous. Note that they have more missions, being able to defend companies in difficulty as well as their creditors. In this little game, the sizes of the big French or foreign business firms monopolize the big contracts, like among others Jean-Dominique Daudier de Cassini (Weil, Gotshal & Manges), François Kopf (Darrois Villey Maillot Brochier) , or even Philippe Druon (Hogan Lovells) and Céline Domenget-Morin (Goodwin). Finally, we will not forget investors (turnaround funds) like Jean-Louis Grevet and Franck Kelif (Perceva) and investment bankers, like Arnaud Joubert (Rothschild).

The rescue of a company, a collective race against time

At the risk of offending some egos, let’s stop this non-exhaustive list there. Whether they are known or more anonymous, these professionals must work together, the rescue of a company implying a common and coordinated action. As a result, all these little people inevitably end up knowing each other well. Too much? “There can be a feeling of being among oneself, willingly admits Hélène Bourbouloux. We often talk to each other, we call each other by our first names. Something to make business leaders in difficulty uncomfortable. The latter could fear being the turkeys of the stuffing with a treatment of their case according to the affinities of each other. Not to mention the fees to be paid, all the more salty as the professionals are renowned. There’s reason to have it bad. But for all the actors questioned on the question, the answer is identical. “This good understanding is a guarantee of efficiency,” says Benoît Desteract. When everyone around the negotiating table is confident, work goes faster. But our main enemy is time.

Regardless of its magnitude, rescuing a business is indeed a race against time. “An activity can quickly deteriorate and every day counts”, warns Patrick Puy. Called at the start of the year at the bedside of Go Sport, the latter quickly opposed his owner Michel Ohayon on the future of the chain, between transfer plan and continuation plan. Dismissed in March, he still rails against the Grenoble commercial court, which did not want to decide immediately and postponed its decision at the end of April. “A month lost is huge…”

When they are called to the bedside of a company, our experts often have little choice. Start by putting out the fire. “It’s unfortunate, but most bosses are in denial about their situation,” says Arnaud Marion, who has created crisis management training sessions to raise awareness. “They always think they’re going to get the icing again. Result, we are called very late. At this stage, the only justice of the peace is cash. Is there any left and especially for how long? The closer the wall approaches, the more the room for maneuver is reduced. Only a month left? “We sit on the cash register,” sums up with a smile Paul-Henri Cécillon, a former executive converted into crisis management. Translation: “It’s a race for money to try to give yourself some oxygen, says lawyer Emmanuel Drai, from the firm Simon Associés, a renowned specialist in ETIs in difficulty, by blocking all possible expenses and making bring in as many foreign debts as possible.”

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To fully understand the situation but also build all kinds of working hypotheses, specialized financial firms are called to the rescue. “We serve as a trusted third party by not being involved in the history of the company”, specifies Cédric Colaert. According to our information, his teams would have recently worked on the case of the Courtepaille restaurants, alerting to a very tight cash flow from this month of May…

Judicial redress, reorganization… and internal tensions

Once the situation has stabilized, possibly as part of a procedure to freeze debts and breathe, our rescuers can consider the next step: getting society back on track. Is it a situational problem? “In this case, the business model is not in question and it is essentially necessary to negotiate with the creditors to adapt the means of financing to the situation”, details Emmanuel Drai. Conversely, a more muscular turn of activity will require finding new money. Not sure that the shareholder in place will follow. It is part of the job to look for all possible solutions, even those that do not please, when the management in place is no longer capable. Transfer of an activity, arrival of new investors in the capital, resale. Everything is put on the table to avoid failure, that is, liquidation.

In the case of big deals with major financial stakes, strategy firms can even be called in to think about new directions, as recently at Pierre et Vacances Center Parcs. “We have drawn up a plan combining upgrading, renovation of residences and disposal of unprofitable stock,” says Eric de Bettignies, founder of the Advancy firm. As for the implementation, the management of this group was even assisted by an external manager from another firm, Alvarez & Marsal. Heavy.

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No illusions, of course. Not everything goes smoothly. Who says receivership or reorganization says internal tensions. At the level of general management, first. “I still remember this leader crying treason, because I felt that a backup was the best solution,” says Antoine Germain, lawyer at Spinnaker, whose clientele is made up of SMEs. Senior executives can also toast, if they seek, for example, to put a spoke in the wheels of crisis managers called in as reinforcements. After his arrival at Papeteries du Léman in 2014 at the request of the shareholder, Michel Rességuier did not hesitate to dismiss the rebels to the change of organization which was planned with a more collaborative management. As for employees, they are obviously on the front line in the event of untimely cuts. In this area, some leaders are renowned for not hesitating, like Patrick Puy since his first post in a company in crisis at Moulinex in 2000. “I have probably laid off 15,000 people in my career, but I I also saved 45,000”, says the man who has just created a turnaround fund for SMEs in difficulty. Of which act.