Distressed-M&A Liquidity Diligence Director

The mandate

The target’s forecast shows adequate cash through completion, but supplier holds, overdue tax, accelerated customer receipts and receivables factoring sit outside its headline bridge. Restarting two constrained lines requires tooling and quality expenditure not included in management’s case. The investor needs to know the day-one funding requirement and downside liquidity path before committing rescue capital.

The eight-week deliverable comprises a source-linked thirteen-week cash model, debt-like funding schedule and completion-to-recovery liquidity case. Milestone one establishes bank, debt and creditor facts by day eight; milestone two reconciles receipts and disbursements in week three; milestone three completes operational recovery stresses in week six; milestone four delivers funding options and committee conclusions.

The client will provide bank statements, borrowing and factoring documents, aged ledgers, tax schedules, customer advances, purchase commitments, payroll, production plans and lender access. Acceptance requires opening cash and facility availability to reconcile, every forecast line to have a driver and owner, and three recovery cases to show peak funding, covenant sensitivity and payment priority. The deal and restructuring partners jointly approve the model.

The engagement excludes acting as administrator, issuing solvency or legal opinions, negotiating lender waivers, directing target payments and validating technical plant recovery. Consultants may expose implications and funding dependencies but cannot determine creditor priority or authorise cash movement. Counsel and operational specialists provide their conclusions as explicit model inputs.

All model tabs, source links, assumption histories, payment cohorts and issue logs will remain editable and transferable. The investor’s treasury team must run one weekly roll-forward and incorporate a new production scenario before acceptance. Any post-close cash office, lender negotiation or turnaround execution would be separately mandated.

Why this is external work

Target management is incentivised to minimise rescue funding, lenders control facility information and the buyer has days rather than months to reconcile operating cash. Normal quality-of-earnings analysis will not expose daily liquidity and creditor dependency. Independent special-situations leadership can build the downside evidence without controlling the target’s cash.

What you will own

• Reconcile bank cash, restricted balances, facility availability, factoring, overdue liabilities and customer advances at the cut-off date.
• Rebuild collections and payments from customer, supplier, payroll, tax and financing cohorts rather than management totals.
• Identify debt-like, leakage, priority and trapped-cash exposures for counsel and transaction teams to disposition.
• Link tooling, scrap, quality containment, labour and supplier restart assumptions to weekly production and cash.
• Stress delayed completion, lost customer support, tighter supplier terms, slower restart and unavailable facilities.
• Quantify day-one funding, peak need, liquidity runway, covenant pressure and capital available for recovery.
• Deliver the cash model, source index, funding schedule, downside cases and committee-ready uncertainty narrative.

Candidate qualifications

• Led liquidity diligence for distressed industrial acquisitions with constrained plants, suppliers and asset-based financing.
• Reconstructed thirteen-week cash from bank, creditor, customer and production evidence when management forecasts were unreliable.
• Identified factoring, customer advances, overdue statutory balances and stretched trade as hidden financing sources.
• Connected factory restart assumptions to cash need without presenting engineering judgments as finance facts.
• Worked alongside restructuring counsel and lenders while maintaining clear analytical and decision boundaries.
• Delivered rolling models that buyer treasury teams operated independently through completion and early recovery.

Non-negotiables

• Can start within four business days and complete two factory visits inside the eight-week exclusivity period.
• Will disclose target, lender, factoring, supplier, restructuring-adviser and competing-bidder relationships.
• Brings distressed industrial liquidity diligence; conventional earnings analysis or budgeting alone is insufficient.
• Accepts no authority over target payments, creditor treatment, legal conclusions or plant-restart decisions.

1. 49 words maximum. Describe a distressed deal where apparent cash runway depended on hidden creditor or customer financing.
2. 49 words maximum. Which production assumption most often creates an understated peak funding requirement?
3. 49 words maximum. Name any lender, target or restructuring relationship that could affect your independence.