What is an Independent Business Review (IBR), and what are lenders really looking for in one?
A core Restructuring interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
An IBR is a review commissioned (usually by lenders, at the borrower's cost) when a credit shows stress, performed by an independent adviser to give lenders a clear-eyed read on the business. Lenders want: an honest assessment of the cause and depth of underperformance, a robust short-term cash position and runway (a tested 13-week and integrated plan), the credibility of management's forecast and turnaround plan (stress-tested, with sensitivities), the recovery/liquidity options, and covenant trajectory. Crucially they want independence — challenge to management's optimism, not a rubber stamp — because they'll base waiver, new-money, or enforcement decisions on it. A good IBR clearly separates fact from management assertion, quantifies downside, and sets out realistic options, so lenders can decide whether to support or exit.
WHAT INTERVIEWERS LISTEN FOR
- ✓Independent, lender-commissioned review of a stressed credit
- ✓Tests cash runway, forecast credibility, turnaround plan, options
- ✓Lenders want challenge to management optimism, not a rubber stamp
- ✓Basis for waiver/new-money/enforcement decisions
COMMON MISTAKES
- ✗Treating an IBR as a management-prepared plan
- ✗No independence/challenge
- ✗Ignoring downside/sensitivity testing
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