Overview

We make a multitude of decisions every day and there will be some level of downside risk in every one of those decisions.

 

Depending on the circumstances and nature of the decision, the size of the downside risk of making a poor decision can range from catastrophic to little or no lasting effect.

 

The general focus of Before The Last Straw Services is to assist the client facing a critical decision where there is a major downside risk.

 

These independent services basically involve challenging the reality/ robustness of the key underlying assumptions and conclusions and may be applied to a wide range of risk situations, including but not limited to:

• Critical contract negotiations;
• Taking on a major client requiring a major expansion of operation;
• Replacing a key major supplier;
• A major internal restructure;
• A major change to the client's operating model;
• A major capital expenditure programme based on new technology;
• A major investment in a new unrelated business activity;
• A sale of the business, merger or takeover;
• A significant repositioning from the existing target markets.

 

The Services

For illustration purposes, the services have been categorised into one of the following types.

• Critical Decision Making Related Services
• Negotiating Related Services
• Planning Related Services
• Banking & Finance Related Services

If your situation and/or requirements do not fit one of these services, please contact me using the form provided on the contact me page to discuss how a service may be tailored to meet your specific situation and requirements.

 

Critical Decision Making Service

This service basically involves challenging the reality/ robustness of the key underlying assumptions and conclusions to identify and bring clarity as to:

• What is the preferred outcome of the proposed course of action;
• Will the proposed course of action achieve the desired result;
• What is the magnitude of the downside risk(s);
• Does size of the upside return justify taking the downside risk(s);
• What options may be available to mitigate those risks;
• Is there a viable lower risk alternative course of action to achieve the same or better desired outcome.

 

Negotiating Related Services

The objective of these services is to identify and bring illumination to major blind spots that may impact on the success of forthcoming or existing negotiations.

These services involves challenging the reality/ robustness of the client's:

• Motivation;
• Preferred option;
• Fall Back position;
• Worst position;
• Other options (as required);
• Understanding of the Other Party's Motivation Preferred option, etc.

 

Planning Related Services

These service involves testing the robustness of a proposed plan where there is a potential major downside risk, by challenging the reality of the client's:

• Underlying assumptions;
• Proposed strategy;
• Estimated timing;
• Expected outcomes;
• Impact of failure.

 

Banking & Finance Related Services

(Note: these services do not include providing Finance Broker services).

 

While loss of confidence may have a material negative impact in most supplier relationships, it is especially true and critical in Banking & Finance relationships

 

Underlying most, if not all, of a lender's decision making is the lender's level of confidence that interest and principal payments will be met when they fall due. 

 

Failure to meet the terms and conditions of the facilities can undermine this confidence to a degree that the lender requires an amendment/ re-pricing or even termination of the client's facilities.

 

A major confidence killer is a default by a new client and/or an existing client failing to meet an action plan that has been put in place to rectify a previous event of default.

 

Reality Testing of Finance Applications

This service is focused on assisting the client who is applying for either:

• facilities with a new lender; or
• a significant increase/variation to existing facilities

by challenging:

• the reality/ robustness of the client's application for finance (and supporting material); and
• the clients proposed terms and conditions; and
• the client's capacity to meet the lender's proposed terms and conditions of approval.

 

Early Warning Signs

Commercial and Corporate borrowing facilities will often have periodic reporting requirements to measure compliance with various performance covenants. 

 

A breach of these performance covenants may result in the facilities being placed in default and termination of the facilities.

 

This service involves challenging the reality/ robustness of the client's:

• Compliance report preparation process;
• Conformity with the loan facility agreement definitions;
• Current period covenant compliance;
• Assessment of underlying trends

 

Default - Negotiating With Your Lender

Compared to applying for a new or increased facility, negotiating with a lender where there has been an event of default can be even more problematic.

 

The focus of this service is to assist the client to protect/ restore the Lender's confidence by assisting the client to prepare for negotiations with the lender.

 

The service involves challenging the reality/ robustness of the client's understanding of:

• how the Lender may see the situation;
• the actions that the lender may take;
• the viability of the client's proposed action plan to restore performance;
• the client's alternative course of action;
• the client's contingency plan if the Lender terminates the relationship.