An introduction to business reviews

A business review, also referred to as a look see or viability assessment, is a comprehensive review of a company’s current financial position. This review would identify areas for improvements, efficiencies, and areas of concern, and assist stakeholders with making important financial decisions around a company’s viability.

A business review is often initiated by a concerned secured lender to gain a true snapshot of where a company is sitting financially and to guide the lender’s decision about how best to proceed with that business relationship. However, a business review can also be initiated by the company itself to assist in providing comfort to its lender(s), potential investors, or other stakeholders about the company’s viability and overall financial health.

The scope of a business review engagement can be very narrow, such as looking at a specific division or project — or quite broad, including almost every aspect of the business.

The typical business review would often look at and assess:

• the company’s assets, liabilities, management, operations, and even its broader industry it;
• the security position of the lender by estimating the net realizable value of the assets covered by the lender’s security; and
• the company’s financial trends and projections to identify opportunities and threats.

After analyzing the above aspects, the business review would typically include options and recommendations, or outline potential scenarios such as if a cash injection is or is not received.

A business review provides the engaging party necessary information to make informed decisions. It may also unearth any number of concerns or opportunities that, if identified in time, could be addressed and/or utilized for the good of all stakeholders.