Underperforming companies often share similar financial indications suggesting inherent problems with the current structure and/or business plan. This may be caused by any number of factors, internal or external to the company itself, including economic, financial, operational or competitive issues.

Financial Indicators

  • Poor budget and planning processes
  • Failure to meet forecasts
  • Decrease in sales
  • Decrease in profit margins
  • Inability to pass on price increases
  • Increase in overheads
  • Inventory build up
  • Receivables build up
  • Creditors build up
  • Failure to generate cash
  • Below industry benchmarks
  • Frequent use of marginal costing to win sales
  • No benchmarks for selling and distribution costs
  • Other financial exposures

Accounting Issues

  • Aggressive accounting policies
  • Changes in accounting policies
  • Lack of internal controls

Bank Debt

  • Change in bankers
  • Loan repayment deferrals
  • Change in security coverage
  • Breach of bank covenants
  • Loan default
  • Constant overdraft excesses
  • Failure to repay seasonal facilities
  • Minimum level of undrawn facilities
  • Other banking indicators

Other Items

  • Cyclical Industry
  • Lack of detailed forecasts / budgets
  • Failure to meet forecasts
  • Delays in responding to bank requests
  • Inadequate financial reporting
  • Loss of confidence by bank
  • Alteration in the timing of regular payments
  • Ineffective cash management


Cortland Valuation Group works closely with the Board of Directors and management to understand the unique challenges to its business and help to identify the underlying causes of underperformance. We begin with an assessment of critical business functions, including:

Management Skills and Processes

  • Management workshops and/or interviews to identify key issues
  • Review background/experience of management, current responsibilities and reporting structures, and management turnover
  • Review role of board and level of involvement in day-to-day management

Funding Structure

  • Review funding structure (ie: debt/equity) to ensure it is appropriate given the company’s turnover, bank covenants
  • Explore options for increased capital injections from current/new stakeholders
  • Identification of surplus assets
  • Identify assets which unnecessarily tie up working capital and that can be readily disposed of, bearing in mind the security position of banks/other lenders
  • Consider options such as sale and leaseback of equipment, vacating unused premises, etc.

Profitability Analysis

  • Historical trend analysis, comparison against forecast of sales, margins and earnings
  • Detailed review of growth rates, cost structure, and margins versus guideline companies in industry
  • Review of any unusual/unexpected movements in share price and trading results

Customer & Product Profitability

  • Identify unprofitable products and customers
  • Understand the company’s customer base, their expectations and perception of the company’s business
  • Customer attrition analysis
  • Understand the company’s product-market strategy

Competitive Analysis

  • Length of customer relationships based on historical attrition
  • Product differentiation
  • Competition
  • Switching costs
  • Economic health
  • Profit margin
  • Bargaining power of customers and suppliers

Intellectual Property

  • Understand the company’s IP portfolio and the alignment between IP strategy and directives with overall corporate strategy
  • Assess the quality and competitiveness of key IP
  • Determine the value of IP


Cortland Valuation Group assists client firms with restructuring and the redeployment of strategic directives.

  • Debtor representation
  • Lender negotiations and debt restructuring
  • Creditor and creditor committee representation
  • Interim management
  • Financial restructuring
  • Operational restructuring