With over 25 years of international experience in the worlds of corporate finance (restructuring, mid-market M&A) and real estate investments, Nicholas Gilani is one of the more prominent figures in GCC’s financial landscape. Prior to co-founding Cyal Advisors DWC, Gilani served as Managing Director for the National Bank of Abu Dhabi's investment banking division, Chief Investment Officer at a Dubai family office and Chief Executive Officer at Ajlan Bros Group in Riyadh.
In discussion with Ronan Coyle, a Partner at executive search firm Page Executive in the Middle East, Gilani said that the economic crisis brought about by Covid-19 will undoubtedly have a deep and far reaching economic impact. To stay afloat, organisations are advised to make bold decisions amid a period of radical change.
According to Gilani’s assessment, the challenges faced by organisations can be categorised into three groups, which he refers to as the three pillars of business recovery.
“The first is the operational pillar. This covers issues regarding employee welfare and safety, workplace functionality, social distancing in the office, and remote working. It also covers the subject of government regulatory compliance and what organisations need to do to ensure they are operating in full compliance with new regulations.”
Gilani's second pillar of recovery is human resources. “Many organisations have or will have to implement staff and/or salary reductions in order to reduce operating costs in a very challenging business environment. Organisations will need to consider their cash reserves and if they can meet payroll commitments as they go through and extended period before business can get back to pre-Covid levels.”
Meanwhile, such measures will have to be taken in light of minimising disruption to the standing business, he says, while maintaining an ethical view to the impacts on people. Expats are a good example: “In the GCC after all many employees are expats, and the loss of a job will also mean they will have to leave the country.”
The third pillar he put forward is the financial pillar. In this space, business leaders are urged to consider a number of multifaceted elements. These include current liquidity position, trade suppliers and trade debtors, bank creditors, and cashflow forecasting. “Navigating these challenges will require a stringent financial optimisation mindset. But a holistic view will be key – communication and relationships are key to successfully executing financial measures,” said Gilani.
CFO in control?
When asked if businesses in the region have the specific leadership skill-sets within their organisation to tackle the pandemic-induced downturn, Gilani's response was an unequivocal 'no'. “This crisis is so sudden and unprecedented, that much of the current leadership do not have the crisis and financial management experience to deal with it.”
This is in part due to the traditional background of the CFO. “They usually have an accounting background, so while they tend to have skill-sets that are well suited to times of normal trading, they but can lack the dynamism and financial crisis management experience needed currently.”
Instead, today’s market requires a hybrid type of a professional who “not only understands numbers but also finance and banking; someone who speaks the language of the bankers, commercial and investments bankers. And finally, someone who is comfortable with the language of lawyers and negotiation in order to re-finance or re-structure existing funded and non-funded credit facilities.”
Financial restructuring
Gilani, an experienced financial restructuring professional, believes there are several key steps that any successful financial restructuring professional needs to take when embarking on a restructuring or turn-around project. “Firstly, it is imperative to win the trust and 'buy-in' of the organisation's management team. They will be a very important ally and their concurrence with the restructuring plan is vital. They will also have a unique understanding of the organisation's history and issues.”
The next most important subject to address according to Gilani is the organisation's cashflow, both inflow and outflow. “Tight control of outflow is vital and only absolutely necessary expenditure should be entertained.” Gilani refers to this process of cashflow control as “steadying the corporate ship.”
On the subject of key experience that an effective financial restructuring professional is required to have, Gilani points to a number of elements.
Business Acumen – Understanding the nature of the firm’s businesses, their clients and suppliers and the markets in which they operate
Accounting and Finance – so that a finance leader can look under the “hood” of the firm and diagnose the issues that have beset the right and left sides of the firm’s balance sheet.
Psychological – Quickly grasping the inner dynamics of the firm and wining the firm owners’ and C-suite level leadership, especially the CFO. And on the bank creditor’s side, generating trust and respect of the Relationship Manager, as he/she would be the one advocating/championing your firm’s case.
In conclusion, Gilani told Coyle that he urges organisations to act as quickly as possible as any delay will most likely serve only to compound the problems. He also argues that informal restructuring arrangements are much more preferable than bankruptcy courts, a destination that should be avoided at all costs.
Sourced from Consultancy-me.com