The IFT Quarterly Update Q3 2024: increasing restructuring and turnaround activity as businesses face ongoing pressures and uncertainty

Our Q3 2024 snapshot marks the fourth quarterly update from The IFT – covering a full year – and so this edition includes analysis of trends in turnaround, restructuring and company distress over the past year, according to the survey and wider data.  You can read the full update here.

We can see a continued steady increase in demand for turnaround and restructuring activity so far in 2024. Once more in Q3 half of IFT partners have seen an increase in turnaround and restructuring activity – with the other half seeing around the same level of activity, and none seeing a decrease in activity. Looking at the trend over the last four quarters, we can see a less sharp increase in activity compared to a spike in Q4 2023 but, overall, a trend of increasing restructuring and turnaround support as businesses continue to face ongoing pressures and uncertainty. For Q3, again the depletion of working capital was the factor highlighted by the most IFT partners as a common theme for businesses in difficulties, followed by the cost of servicing debt and then inflationary pressures.

In terms of the broader company data, whilst we can over the last four quarters see indications of a declining trend in insolvencies in 2024 compared to 2023 (though these remain at historically high levels); conversely, FRP data also shows an increasing trend in businesses in financial distress over this period. Business distress and insolvencies remain clearly concentrated in certain sectors, in particular construction. This data indicates that increasing numbers of businesses which are viable and previously may have had few issues may be experiencing difficulties, even whilst in the past year there are fewer reaching the point of insolvency as some of the pressures of inflation have started to ease and interest rates have started to come down.