Business, it may seem, is always in flux, with what seemed constant and solid suddenly dissolving away. With the demands of earnings and profits, there is always a challenge to remain ahead of the curve.
Your business may have seemed secure in its market niche, maintaining steady sales and good relationships with your customer and your suppliers. Then, something happens, sometimes gradually and other times, quite suddenly. Perhaps you need to acquire another entity to remain competitive or, you review all available information, and determine it is best to structure a sale or a dissolution of your business.
Two examples occurred recently. There is the announcement by HP that it is planning to dissolve into two new entities, with one focused on printers and consumer computer products and the other working with the large corporate server business.
While related, with some common overlap, such as the purchase of server components and computer or printer components, apparently management has decided that the two business are sufficiently different that they both can better succeed apart.
A second incident involved GT Advanced Technologies. They had a market cap of $1.5 billion last week and this Monday, announced they were filing for bankruptcy protection. They are a supplier for Apple and manufacture sapphire glass that is used for lenses and other applications on smartphones.
Apple’s announcement that they would not be using sapphire glass for their iPhone main display appears to have triggered a substantial loan repayment agreement, which caused a substantial draw down of cash on hand, and would have impaired their ability to continue operations.
Whether your business is slowly evolving or subject to the whims of your business partners, you should have contingency planning in place to deal with these potentialities. Your finance, legal and risk assessment professionals should all work together to assist with these matters.