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Portfolio rehabilitation

Many private equity firms continue to plough money into underperforming portfolio companies. However, there is often a degree to which the target company can preserve and even generate cash from the balance sheet. Tony Mitchell of PricewaterhouseCoopers discusses this balanced approach to salvaging portfolio companies.

This approach is often used in situations where the company's situation has deteriorated significantly and is in need of swift action. One of the methods might include extracting cash from the balance sheet by converting assets into cash, such as inventory, receivables and fixed assets. Others would be to negotiate with suppliers, reduce staff costs and reduce overheads.

Copyright © 2003 PricewaterhouseCoopers

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