Mercer & Hole on saving an investment firm
The breakdown of corporate governance in any organisation can lead to significant problems, financially, operationally and structurally for the business going forward. Often such breaches are associated with financial loss, breach of regulation and loss of trust, both internally and externally. Once such a breach is discovered it is essential that the organisation implements a recovery plan to deal with the legacy issues caused by the breach, and to ensure that no such breach will occur in the future. Left unresolved, a known breakdown of corporate governance leaves directors open to criticism at best, and personal liability, or accusations of collusion at worst.
These issues were brought into particular focus when Mercer & Hole were approached by a director of an FCA regulated business, following the breakdown of a proposed takeover. Financial discrepancies uncovered during the due diligence process had arisen because of a lack of corporate governance.
The Company was an FCA registered entity with circa £100m assets under management. In addition the Company had advisory relationships with clients who had assets under management of several times that amount. As an FCA registered business, any financial discrepancy was under particularly intense scrutiny.
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The crisis management skills developed during a career of managing businesses in financial and operational distress, allowed Mercer & Hole’s restructuring team to develop and implement a multi-faceted approach to resolve the Company’s governance issues, which had caused financial and regulatory crisis, and nearly led to a cessation of operations.
Directors are urged to seek relevant professional advice wherever they have concerns as to the implementation of corporate governance, or suspected breaches thereof, which will often have a significant impact on the financial performance of their company. This is particularly important where such breaches may lead to the insolvency of the company, given the implications for potential personal liability of the directors in such circumstances.
If you would like us to provide you with any help, guidance or assistance contact the Restructuring & Insolvency team on 020 7236 2601.
Date: 18th March, 2016
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