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Fewer IBRs, more Collaborative Business Reviews in 2020

Suppose you work in commercial lending at a bank, or in a private equity fund…

Are you trying to work out how to best support the businesses you lend to, and get ahead of oncoming risks? You might be spending hours on Zoom calls with portfolio companies, trying to help them weather the current storm.

If so, send this article to some of them and see what they think.

Independent Business Reviews come too late in the game

Banks have lent critical funding to businesses across countries and economies. In bad states of the world, when risks to a company’s cash flow or covenants materialise, one option for a lending bank is to enact an Independent Business Review (IBR).

At Kin + Carta, we have helped several banks conduct IBRs in recent years. A company director gets a call saying their business is under review. The process can then take anywhere from 4 to 12 weeks – and we have seen first-hand the pressures placed on a company and its bank relationships. It can result in the bank altering its lending terms, potentially adding capital if they believe the business remains viable, or even a withdrawal of funds.

In today’s world, we believe that traditional IBRs are too zero-sum, and often too late in the game – for both the company and the bank.

Today's world needs swift collaboration

A priority question for all of us today – including government, banks, private equity, consultants – is, How best can we help businesses and their people weather the storm, and get ahead of oncoming risks?

We believe four elements need to be swiftly addressed, forming what we describe as ‘Collaborative Business Reviews’:

  • Collaboration and empathy with the company’s leadership, people and teams
  • A forward-looking evaluation of risks to the strategic horizon, without disrupting BAU
  • A constructive assessment of the company’s existing digital agility to respond to those risks
  • The identification – in two weeks, rather than two months – of ‘stop, start, continue’ actions to defend against those risks, enhance digital agility, and then find growth opportunities

    It doesn’t make sense to wait as risks grow daily: We need to get ahead of the game.

Introducing Collaborative Business Reviews

It’s not ok to simply pick up the phone and tell a company that its funding lifeline is under review: We need the right people in the room, working together and swiftly on forward-looking solutions.

Diagram of the two-week approach to get ahead of the storm

Why now?

We are all under duress from covid’s force majeure, but also from digital challenges that have been emerging at speed in the past decade. These digital challenges are not trends that come and go. They are here to stay, as set out in our 2020 Global Change Report. Core survival strengths will be collaboration, empathy and agility.

Teams and propositions need to be responsive, scrappy and adaptable, more than ever. Digital systems – across data, processes and technology – need to allow for purposeful control.

We all need open and honest communication. We all need to feel some agency. A plan beats no plan.

About Kin + Carta Advise

We are Kin + Carta Advise a tech-led management consultancy.

We integrate insights from our sister companies, Kin + Carta Create and Kin + Carta Connect, who specialise in next-gen software engineering, product design and digital customer experience.

Our sector expertise spans Financial services, Fintech, Health Services, Pharma, Consumer, Retail and Distribution.