“Before the crisis, those taking out loans set the rules of the game. They were neither requested to present very serious business plans, nor did they have to prove how they will develop the business and how they will reimburse their loan. Now, things have changed,” said Vasile Iuga, Country Managing Partner of PwC Romania, who manages the company’s operations in Southeastern Europe.
Iuga said that it is lenders who are controlling the game now, and Romanian entrepreneurs have to make greater efforts to convince banks that their businesses are viable. In order to be credible, business plans must include several crisis scenarios, both optimistic and pessimistic, as well as sensitivity analyses, which indicate how the business reacts to modifications of its fundamental parameters.
The company official added that there are several alternative methods that managers can use to obtain funds: assignment of receivables, intra-group loans, barter, or leasing operations.
At present, an increasingly number of takeovers of businesses which are facing difficulties, the so-called “distress acquisitions,” are taking place on the market. “Everybody is waiting to seize the best moment, it is a psychological game, a game of poker,” Iuga said.
