The recapitalization of a comapny is a complex and individual process that includes the reverse transaction of the crisis.
In many cases, a crisis situation is recognized much to late and as time goes by a successful rehabilitation will become more and more difficult.
Therefore, the first responsibility of management, Supervisory Board and advisors is to keep an eye on critical developments. First indications for a crisis can be the creeping loss of the companies mission and commitment. As well, the sight of the personnel responsibilty and the competitive situation gets lost.
With a certain resignation a loss of further development the company stands at the beginning of a crisis.
These first warnings will be often ignored by the company's management.
The crisis spiral continues and in consequence, the company looses market-shares, the turnover falls and costs increase.
In this stage, the equity capital is already affronted, but in most cases the company's management thinks that it is only a temorary depression.
At this point competent advisers should be hired because with the increasing crisis the chances for recapitalization shrink. In fact, entrepreneurs wake up and call for advice when its much to late and liquidity is already attacked dramatically. In this stage of crisis it is also difficult for consultants to save the company and not run into insolvency. The liability risks for the management increase significantly, bank limits are overstretched and there is a loss of confidence on employees side.