The Special Management Department
One in five (in some sectors even one in three) companies with bank financing is still placed with the so-called Special Management department. The term 'Special Management' is a generic term for such departments, as the word 'aspirintje' is in the medical field. Although banks use different terms for it – such as financial restructuring, intensive management, intensive care – the Special Management department is popularly spoken of. This department provides specialist support for companies that have a high risk profile from the bank's point of view. The purpose of the Special Asset Management department is, on the one hand, to guide companies towards recovery and, on the other, to monitor the bank's credit risk. A company is transferred to the Special Management Department if, in the eyes of the bankers involved, it is unlikely that the company will be able to meet its bank's obligations in the short or medium term. This can also happen to companies that are still making a profit, ergo, companies that are in a strategic crisis, at least from the bank's perspective.
Uncertainty among entrepreneurs
There is a lot of uncertainty about the functioning of the 'mythical' department for Special Care. When I am in front of rooms with entrepreneurs, I regularly ask the question who knows this department and if anyone happens to be doing business with such a department at the moment. Then it usually remains silent in the room, or people just burst out laughing. Quite understandable, for two different reasons. First of all, many entrepreneurs are not aware of this department, which in itself is strange since an estimated one in five companies in the Netherlands currently falls under these departments. Secondly – and that is perhaps even more interesting – it is apparently taboo to say that you fall under the responsibility of a Special Asset Management department. When the topics 'severe weather', 'failure' and therefore 'Special Management' are discussed, we prefer not to give it a go. We apparently live in a society in which every entrepreneur has to be a hero, and if you don't fit that image, you are apparently a zero.
The sofa is not popular
Overall, the bankers of the Special Management department are not popular. It regularly happens that the bank and the entrepreneur get bogged down in heated discussions. As a result, critical time is wasted that is needed to rescue the company. Visually described, the entrepreneur turns the rudder of the almost sinking Titanic to the left and the banker to the right, so that the ship eventually does not move and then sinks.
Connect with your financiers
Whether you've borrowed money from family members or from the bank, make sure you engage and stay in the conversation. Yes, that can be difficult at times. Because what are they doing? And by the way, it's going well, isn't it?
Marnix de Rover, of the imaginary Salem Industries, first chooses in our book to keep playing nice weather. In doing so, he enters into full confrontation with the bankers of the Special Management department. He initially does not intervene and thus brings his company to the edge of the abyss. That means that he then has to fight with the bank to survive.
After several escapes – playing nice weather, complaining – he finally decides to take action. He makes a financial clean sweep and thus regains the trust of the bank and its customers. But it was a dime on its side. So don't wait as long as Marnix when the dark clouds gather over your company.
The Special Management handbook
In the book Doing business in severe weather – The survival guide for entrepreneurs in Special Management – you will read the crucial steps needed to get out of bad weather. Specifically, it discusses how you can influence the bank in the right way and you read which measures are needed to draw up a successful turnaround plan. In the book you can read how Marnix the Robber of the imaginary Salem Industries brings his company to the brink of ruin and has to fight with his bank to survive.
Doing hard again was written by professor of turnaround management Jan Adriaanse and consultant Erik in 't Groen, former Special Management Banker. Thanks to their years of experience, the authors can provide valuable advice for entrepreneurs with financial problems and for (starting) entrepreneurs who want to avoid them. www.zwaarweerondernemen.nl
Erik in the Green
Consultant Corporate Restructuring & Recovery at Kruger