Many business owners first encounter the term IDW S 6 when dealing with banks or financing partners. This often gives the impression that it is a formal report or a regulatory formality for companies in crisis. However, as enomyc author Tom Hammer explains, a restructuring plan in accordance with IDW S 6 can do much more: when intelligently designed and implemented, it ensures clarity in corporate management and builds trust among financing partners—thereby laying the foundation for a sustainably successful future.
The IDW S 6 standard was developed by the Institute of Public Auditors in Germany (IDW) and outlines the requirements for a professional restructuring plan. The goal of the process described therein is to conduct a structured analysis of a company’s economic situation and to derive a viable plan for stabilization and further development.
As a rule, the restructuring plan serves as the basis for discussions regarding financing issues. To this end, it answers three key questions:
- Where does the company stand today?
- IDW S 6 provides a well-founded analysis of the market environment, competition, business model, and the current economic situation.
- What developments have led to the current situation?
- To this end, strategic, structural, or operational factors that caused the company’s special situation are examined.
- How can the company be sustainably and successfully continued?
- An IDW S6 report also includes an action plan embedded in an integrated financial plan consisting of the income statement, balance sheet, and the resulting cash flow statement. Together, they outline a robust future outlook for the company. The underlying planning horizon depends on the business model and the specific situation. For small and medium-sized enterprises, planning typically covers two to three years, and in some cases up to five years.
Typically, banks and financing partners wish to clarify the following aspects in particular as part of such a going concern forecast:
- Liquidity: Is solvency ensured throughout the entire planning period (including short-term 13-week liquidity planning), or what conditions must be met so that the company can meet its financial obligations at all times and stable continuity is guaranteed?
- Plausibility of the integrated planning: Are the assumptions regarding revenue, costs, working capital, and investments consistent and transparent?
- Measures: Are the planned operational and strategic measures specifically defined, quantified, and realistically implementable?
- Financing structure: Is existing financing sufficiently secured or extended, or are additional financing decisions required (e.g., from banks, lenders, or shareholders)?
- Sustainability of the business model: Is the company sustainably competitive and profitable at the end of the planning horizon following the implementation of the measures?
- Scenario and sensitivity analyses: How robust is the planning against deviations, for example in revenue development or cost assumptions?
The result, often referred to as an IDW S 6 “report,” provides an optimal basis for business decisions and for coordination with financing partners. At the same time, it offers a clear framework for the operational management of the company. Based on the analysis, specific levers can be identified that have a direct impact on the company’s earnings, liquidity, and competitiveness. These include, for example, focusing on profitable products and customers, adjusting cost structures, optimizing pricing and margin models, or the targeted management of working capital and investments.
For company management, this means: An IDW S 6 concept can help translate abstract strategic goals into concrete, actionable measures—with clear prioritization, quantified effects, and a direct link to and measurability within integrated planning.
When is an IDW S 6 concept required?
An IDW S 6 restructuring concept is often needed when companies face economic or strategic challenges and must simultaneously make important financial or structural decisions.
Typical situations include declining earnings or rising cost pressures, increasing debt, or a strained liquidity situation. However, structural changes in the market environment, discussions with banks regarding adjustments to financing structures, or planned restructuring or transformation measures can also serve as a reason to develop an IDW S 6 concept.
Background: In the situations mentioned, banks and investors require a structured and independent assessment of the company’s future viability. IDW S 6 has established itself as a useful standard in the German restructuring landscape.
The Role of the Restructuring Advisor: Sparring Partner and Independent Expert
The preparation of an IDW S 6 restructuring concept is typically carried out by specialized restructuring advisors. These advisors assume a unique function and role between company management and financing partners.
A key part of the process involves analyzing the economic situation together with company management and developing strategic options. Experienced restructuring consultants add significant value here by bringing not only an external perspective and industry comparisons but also extensive experience from comparable situations, thereby acting as strategic sparring partners for management. Executives and entrepreneurs benefit from a structured analysis process that helps clearly address challenges and develop sustainable solutions.
At the same time, restructuring consultants assume an independent expert role within the framework of an IDW S 6 process. Banks and investors expect an objective, transparent analysis of the economic situation as well as a robust assessment of the planned measures. This independent assessment builds trust among the parties involved and often forms the basis for important decisions among financiers.
A restructuring plan must meet two requirements: First, it must be operationally feasible and realistically address the company’s specific circumstances. Second, it must comply with the regulatory requirements of IDW S 6 so that it is accepted by banks as a basis for decision-making. It is also crucial that the measures align with the organization’s actual capabilities. In exceptional situations, management and the organization are often closely intertwined. Therefore, the planned measures must not only be technically sound but also actually implementable.
Here, too, the added value of an experienced consultant becomes apparent: they ensure that the concept, planning, and measures are tightly integrated, align with the company’s operational realities, and guide the company out of the exceptional situation. A viable restructuring concept always emerges through close collaboration between the company and the consultant. Furthermore, in close coordination with management, the consultant plays a central role in communicating with financing partners. They prepare decision-relevant content tailored to the audience, structure the dialogue, and ensure that the underlying logic of the concept is presented in a way that banks can understand.
The added value of an experienced partner is particularly evident in negotiation situations: such a partner understands the requirements and expectations of the financiers, can anticipate critical issues, and supports management in developing consistent and persuasive lines of argument. This not only relieves the company throughout the entire process but also results in noticeably higher-quality communication, thereby providing a better foundation for sound financing decisions.
Structured Transparency as Support for Management
The development of a restructuring plan also offers significant added value to the management of the affected company. Especially during periods of economic uncertainty, business decisions often must be made under increased time pressure and based on incomplete information. In this situation, a systematic analysis and planning process creates transparency regarding the economic situation, the underlying causes, and the possible courses of action.
For managing directors, this means one thing above all: strategic and operational decisions can be made based on a sound analysis and documented in a transparent manner.
Many entrepreneurs therefore view this approach not only as a tool for stabilizing the company but also as valuable support for responsible and transparent corporate governance, particularly during phases of significant strategic decision-making.
More than an expert opinion: IDW S 6 as the nucleus for strategic development
In practice, we often find that the IDW S 6 process not only contributes to stabilization but can also trigger sustainable strategic development of the company. Typical outcomes include, for example, a stronger focus on profitable business segments, the—often long-overdue—adjustment of cost and organizational structures, the optimization of sales and production processes, or the further development of market positioning, such as through the creation of new business models.
Many companies thus use the structured IDW S 6 process as a starting point for sustainable transformation and long-term competitiveness.
Strategic preparation creates room for maneuver
This makes it clear: An IDW S 6 restructuring concept is far more than a purely formal report. It provides clarity on a company’s current economic situation and plays a key role in developing a robust outlook for the future.
In our experience, entrepreneurs should therefore view IDW S 6 primarily as an opportunity. With the right support, such a process can help gain strategic clarity, strengthen trust among financing partners, and lay the foundation for a successful future with sustainable value creation. Restructuring consultants guide the process as sparring partners for company management. At the same time, they act as an independent authority that develops a solid basis for decision-making for all parties involved.
So if you are concerned with the strategic development of your company or with stabilizing your financing structure, an early, structured analysis can provide decisive competitive advantages. An open exchange about possible options is often the first step toward new opportunities for action.