How do you verify a company's projections in restructuring?
When a company is facing financial distress, it may need to restructure its debt, operations, or capital structure to avoid bankruptcy or liquidation. Restructuring often involves negotiating with creditors, lenders, shareholders, and other stakeholders to reach an agreement that improves the company's viability and solvency. To facilitate this process, the company usually prepares a set of financial projections that show how it expects to perform under different scenarios and assumptions. These projections are crucial for evaluating the company's restructuring options and determining its fair value. However, they are also subject to uncertainty, bias, and manipulation, so it is important to verify their accuracy and reasonableness before relying on them. In this article, you will learn how to verify a company's projections in restructuring using four key steps.