We describe the typical restructuring of a Spanish middle-market company: from initial diagnosis to stabilisation, including the hardest decisions along the way.
Corporate restructurings are the least glamorous part of investing. There are no elegant presentations, no champagne at closing, no positive headlines. There is hard work, difficult decisions, uncomfortable conversations, and uncertainty that stretches over months.
However, restructurings are one of the activities that generate the most value in the middle-market. Rescuing a viable business from financial distress creates value for all parties: employees who keep their jobs, creditors who recover a significant portion of their debt, clients who maintain their supplier, and the investor who acquires an undervalued asset.
The company: an industrial business with 120 employees, revenue of 18 million euros, and EBITDA that has fallen from 2 million to 400,000 euros in three years. Financial debt totals 8 million euros — 20 times current EBITDA. The 65-year-old founder is exhausted and acknowledges the situation has overwhelmed him.
The causes of deterioration are multiple and intertwined: loss of an important client (25% of revenue), failed investment in a new product line, cost increases not passed through to pricing, and an organisational structure that has not adapted to the new reality.
We dedicate the first four weeks to understanding the real situation — not the one the founder has told us, which tends to be partial and involuntarily optimistic, but the one revealed by the numbers, conversations with the team, and direct observation of operations. We conduct financial analysis to understand real cash generation, operational analysis to identify inefficiencies, team evaluation to assess key people, and creditor mapping.
The objective is simple: prevent the company from collapsing while the definitive solution is negotiated. We inject the necessary liquidity for payroll, critical suppliers, and tax obligations. We communicate transparently to key stakeholders. We implement immediate cost savings and centralise cash management.
Simultaneously, we negotiate with financial creditors. The typical proposal includes partial debt write-downs (generally 30-50% of nominal), payment deferrals, extended amortisation periods, and sometimes conversion of debt into participative instruments. The investor’s credibility is crucial in this phase.
Once stabilised, we implement operational recovery: commercial focus to recover and diversify the client portfolio, surgical cost optimisation, selective reinvestment in competitive advantages, and management professionalisation.
Well-executed restructurings produce results that amply justify the effort. Two to three years after intervention, the typical company shows recovered or higher revenue, improved margins thanks to an optimised cost base, sustainable debt, a motivated team, and a solid foundation for growth — and a significantly improved company valuation.
Not all restructurings succeed. Some fail because the underlying business was not viable, the market deteriorated more than expected, or the key team could not be retained. The risk is real and we accept it with eyes open. But when it works — and it works more often than not — the satisfaction is hard to compare with any other investment activity.
For the Spanish middle-market business owner, navigating these complexities requires a combination of professional advice and practical common sense. The regulatory and financial landscape has become more sophisticated over the past decade, and the approaches that worked twenty years ago may no longer be adequate.
However, it is equally important not to be paralysed by complexity. The fundamentals remain straightforward: understand your obligations, seek competent professional advice, implement pragmatic solutions, and document everything. The companies that follow these principles position themselves for success regardless of the specific regulatory or financial challenge they face.
What we have observed consistently across hundreds of companies is that the gap between theory and practice is significant. Many companies are aware of their obligations in principle but have not implemented the specific measures needed to comply in practice. This gap represents both a risk — potential penalties, reputational damage, and transaction complications — and an opportunity, because companies that close this gap distinguish themselves from their peers in the eyes of buyers, lenders, and clients.
The introduction of an external partner — whether an investor, an adviser, or a professional manager — can be transformative in this context. External partners bring fresh perspectives, experience from other companies facing similar challenges, and the objectivity needed to assess the current situation honestly.
At Blue Mountain, we bring to each portfolio company a set of standards and practices that we have refined over years of experience. These are not theoretical frameworks — they are practical playbooks that we have tested and refined across dozens of companies in multiple sectors. The specific implementation varies from company to company, but the underlying principles remain consistent: transparency, documentation, proportionality, and continuous improvement.
The business owner who proactively addresses these challenges — rather than waiting for an investor, a regulator, or a crisis to force action — demonstrates the kind of management quality that commands respect from all stakeholders. It is a signal of maturity that resonates far beyond the specific compliance or financial issue at hand.
We encourage every middle-market business owner in Spain to take stock of where they stand on these issues and to develop a realistic plan for addressing any gaps. The investment required is modest relative to the potential costs of inaction, and the benefits extend well beyond regulatory compliance to encompass improved management, better decision-making, and a stronger competitive position.
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.