Deloitte Restructuring Report 2023/2024: Primarily suppliers affected

In a recently conducted survey, opinions and forecasts were gathered from 190 professionals in the fields of insolvency consulting, management and legal consulting, financing, as well as from (interim) managers of various companies. They provided their assessments regarding the economic outlook and industry trends as well as the current situation in the corporate restructuring market.

Suppliers in particular must undergo massive restructuring

The results of the study suggest that an increasing number of corporate restructurings can be expected in Germany, with automotive suppliers, construction companies, retailers, and hospitals being particularly affected. The situation is seen as especially critical in the automotive sector, where not all suppliers are likely to successfully manage the transition to electromobility and digitalization. The debt of companies has risen significantly due to increased costs and interest rates. "Suppliers in particular are facing enormous challenges," it says literally. Despite the record profits of car manufacturers, their suppliers are currently undergoing fundamental transformation processes that not all might survive, which is why they are likely to become a main field for restructuring.

German car brands need affordable electric cars quickly

Another study by Allianz Trade highlights that European, and especially German, car manufacturers face major challenges as they entered the electric vehicle market late compared to China and struggle to produce affordable models profitably. Adapting to industry changes poses problems for many companies, which could have significant impacts on the labor market. Since electric cars require fewer parts, manufacturers could manage with 30 percent less staff, which according to Allianz Trade, could endanger 730,000 jobs in the EU, including 260,000 in Germany.

Interestingly, the German mechanical and plant engineering sector, according to Deloitte, is currently less in focus but is likely to face problems in the medium to long term as well. "Companies in the sector need to sharpen their product portfolio in global competition and advance innovations in a targeted but thoughtful manner." At the same time, working capital and major cost positions need to be consistently adjusted and made more flexible.

Restructuring practice is becoming increasingly complex

According to those surveyed, restructuring cases are becoming increasingly complex in terms of content but also due to the high number of stakeholders. Additionally, the course of restructuring cases is becoming more uncertain. More than ever, Deloitte states, "a clear strategic direction and an adaptable business model are key to successful restructuring."

In addition to these points, according to the experts, it is often the lack of operational implementation that causes restructurings to fail. Comprehensive and holistic restructuring is becoming increasingly important. Instead of "just" addressing liquidity shortages, business models must also be transformed, and comprehensive implementation must not be neglected.