Frankfurt Restructuring Forum: Digitization - Opportunity or Risk in Restructuring?

Frankfurt am Main, November 2, 2017 - Digitization has almost degenerated into a “buzzword”. However, every industry and every area of life is pervaded by it. Reason enough to deal with the topic of “Digitization - Opportunity or risk in restructuring?” at the ninth Frankfurt Restructuring Forum. An important finding of the evening: Digitization offers modern media cannot replace many options that will make work easier in restructuring, but personal communication during important negotiations.

Digitization is the “automation of processes and business models by networking digital technology, information and people.” With this initial definition, Markus Plankemann (Director and Project Manager Digital Business Development, Commerzbank AG) opened the Frankfurt Restructuring Forum. The particular challenge, according to the banker, is that the development of technology is exponential, but that people are used to thinking linearly. This creates a gap that needs to be closed. In his lecture, Plankemann emphasized that “Digitization is not a trend and everything that can be digitized will be digitized. Entire business models are changing”. His advice to the guests of the Frankfurt Restructuring Forum: do not bury your head in the sand, but actively deal with the issues. The technology is important and certainly also the driver, but not the critical success factor. A “new way of thinking” in the form of knowledge is necessary. “The qualifications and skills of your own employees are crucial. It needs impulses from within as well as from outside and a new culture that is open to change and new impulses for one's own business model,” says Plankemann. This applies both to the restructuring industry itself and to the ailing customer companies. In the subsequent discussion - moderated by Dr. Raoul Kreide (GSK Stockmann) and Eva Ringelspacher (hww Unternehmensberater GmbH) - Frank Lembke (board member, STP Informationstechnologie AG), Reinhard Voß (lawyer, chairman of the supervisory board, Andersch AG) and Markus Plankemann continued to discuss digitization in the context of restructuring.

All those in the discussion agreed that German medium-sized companies deal with digitization in a completely different way than, for example, start-up companies. But that one can certainly learn a lot from the latter. “They simply break the rules that exist in established markets and are not afraid to intervene in established business models. They just do things without forever discussing, without constantly weighing up the risks or without having a product that has been perfectly developed right through to the end,” said Frank Lembke, describing his perception of start-ups. Reinhard Voss was convinced that medium-sized companies in Germany had only been very weakly digitized so far. In the course of a restructuring, it is therefore a crucial task of the consulting and financing side to consider the future viability of the company as well - in the light of digitization. His limitation: “But we must not lose sight of the essentials: the liquidity and profitability of the company.”

When asked whether restructuring decisions could also be shifted to computers, Voss said no. In crisis companies, the situations and above all the financing structures have become so complex that digitization is only an aid, but people are still irreplaceable for the decision: “It is often important to make the right decision in the crucial situation. In addition, especially when it comes to restructuring, we have to make ad hoc decisions. This of course requires courage and not just a lot of time.” However, digitization would bring a major increase in efficiency on the personnel and cost side, which would be particularly noticeable in the pure private customer business. Plankemann was also convinced of the efficient processing at the banks: Thanks to digital developments, information could be processed quickly and decisions prepared so that people can then make faster decisions. This is an enormous relief, especially in the age of big data. Lembke was also able to confirm this: In his experience, the restructurers - regardless of whether they are administrators or consultants - are confronted with a huge amount of customer data and documents. Unlike in the past, these are digital today and no longer fill hundreds of folders. The first stage, which has meanwhile been achieved thanks to digitization, is to store these documents in a meaningful way so that those involved can work with them. The next stage is automation, i.e. the automated processing of the topics - partially prepared by the technology. The next level would then be artificial intelligence. However, the second and third stages are still in their infancy.

According to Plankemann, digitization would have a major impact on communication. The greatest challenge is to become multi-channel capable. Voss even went a step further. He believed that the choice of how and how to negotiate was a tactical, if not strategic, decision. “We will certainly get to doing more video conferences. However, my experience is that these are not suitable for difficult decisions. You are more likely to reach your goal or a consensus if you sit face-to-face,” says the long-time banker. Aspects such as non-verbal communication would also play a role, as would corridor conversations or smoking breaks. A video conference is good if it is only a pure exchange or regular communication. In the daily collaboration in restructuring projects, the industry would increasingly work via project rooms, said Lembke. For each customer there is then a project room with all data with a messaging function. “We will certainly continue to write emails, but without any attachments. We will increasingly store documents in the cloud or data rooms and share the relevant links via email,” says Lembke.

The organizers of the Frankfurt Restructuring Forum are Brinkmann & Partner Rechtsanwälte | Steuerberater | Insolvenzverwalter, GSK Stockmann Rechtsanwälte, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft and hww hermann wienberg wilhelm. The restructuring forum is a platform for industry experts and brings together everyone involved in the restructuring of a company twice a year. High-ranking guests present a current topic from different perspectives and share their expert knowledge with the guests in the discussion. More at: The next event will take place in spring 2018.