We are often surprised by the level of optimism with which some companies enter insolvency proceedings. Yet insolvency experts know a sobering reality: today, only one in four companies successfully returns to the market after insolvency. The rest are liquidated.

Just five years ago, the picture was very different. In 2020, 62% of insolvent companies were either sold as going concerns or successfully continued operations.

Why Companies Should Do Everything Possible to Avoid Insolvency

Insolvency rarely arrives without warning. It is usually preceded by declining margins, shrinking order books, rising costs, overdue receivables, exhausted credit facilities, and an organization that increasingly operates in reactive mode rather than proactively shaping its future.

Despite these warning signs, many companies wait too long to take action. They hope for the next major contract, an economic recovery, government relief measures, or simply that conditions will somehow return to normal. That hope can be dangerous.

Corporate crises are often not merely the result of difficult market conditions. In many cases, they are self-inflicted.

The latest United Interim Economic Report 2026 provides compelling evidence. In a survey of approximately 550 interim managers, respondents identified the most common causes of corporate distress as:

• Failure to adapt to changing market conditions (87%)
• Recognizing the severity of the situation too late (86%)
• Inefficient corporate management (81%)
• Resistance to external advice at the executive level (79%)
• Insufficient focus on customer needs (74%)
• Lack of innovation (71%)
• Neglect of sales and marketing activities (62%)
• Poor financial management and control (60%)

These figures should serve as a wake-up call.

They demonstrate that insolvency is often not the first mistake, but rather the final stage of a long chain of managerial failures.

In times of crisis, time is the most valuable resource. The earlier a company identifies its challenges, the more options remain available: cost-reduction programs, sales initiatives, product adjustments, financing negotiations, restructuring measures, investor engagement, leadership changes, or operational turnaround programs.

Companies that wait until liquidity is exhausted, suppliers become concerned, and banks begin demanding additional collateral have already lost most of their strategic flexibility. At that point, management is no longer steering the business, it is merely responding to emergencies.

The fact that 86% of interim managers cite “recognizing the severity of the situation too late” as a primary cause of business failure is particularly alarming. It suggests that many companies do not fail because a rescue was impossible. They fail because reality was acknowledged too late.

External Pressures Affect Everyone

There is no doubt that businesses today face significant challenges: bureaucracy, high energy costs, labor shortages, geopolitical uncertainty, digital transformation, artificial intelligence, changing customer behavior, and intensifying competition.

However, these pressures do not affect a single company alone, they affect entire industries.

The decisive difference is therefore often not the external circumstances, but how companies respond to them.

When 87% of interim managers identify a failure to adapt to market changes as a key cause of crisis, the message to CEOs, business owners, and board members is unmistakable:

Markets do not wait. Customers do not wait. Competitors do not wait.

Companies that fail to continuously review and adapt their business models, processes, products, and sales strategies risk being overtaken by reality.

When Operational Weakness Meets Leadership Blind Spots

Particularly dangerous is the combination of operational weakness and managerial isolation.

“Resistance to external advice at the executive level” was identified by 79% of respondents as a major cause of corporate crises. This is more than a leadership issue, it is a significant insolvency risk.

Many entrepreneurs and executives perceive restructuring, turnaround initiatives, or external support as an admission of failure. In reality, the opposite is true.

Leaders who take corrective action early demonstrate responsibility and professionalism.

Avoiding insolvency does not merely protect shareholders’ interests. It protects jobs, customer relationships, supply chains, intellectual capital, brand value, and often the life’s work of the entrepreneur.

A healthy company is both an economic and social ecosystem. When it enters insolvency proceedings, the consequences extend far beyond ownership. Employees, families, suppliers, service providers, banks, landlords, municipalities, and business partners are all affected.

That is why companies should do everything possible before insolvency becomes unavoidable, not out of pride, and not out of panic, but out of responsibility.

The Most Common Causes of Corporate Crisis Are Preventable

The causes identified in the Economic Report share one important characteristic: they are manageable.

Failure to adapt to market changes can be addressed through systematic market intelligence, ongoing customer dialogue, and strategic scenario planning.

Inefficient management can be improved through clear accountability structures, stronger performance metrics, and disciplined execution.

Weak financial control can be corrected through robust cash-flow planning, contribution margin analysis, working capital management, and regular forecasting.

Even neglecting sales and marketing is not an unavoidable fate, it is a decision, often an unconscious one.

During difficult periods, companies frequently cut spending in these areas first, even though this is precisely where new demand, new customers, and future revenue must be generated.

Businesses that focus solely on cost reduction without pursuing market expansion often emerge smaller, but not stronger or more sustainable.

Recovery Begins with Difficult Questions

Companies determined to avoid insolvency must have the courage to ask themselves tough questions early:

• Are our products and services still relevant?
• Do we truly understand our customers’ current needs?
• Do we have a reliable and transparent liquidity plan?
• Do we know which customers, products, and locations are genuinely profitable?
• Is our sales organization strong enough to deliver growth?
• Are we making decisions quickly enough?
• Are there topics that cannot be openly challenged within our leadership team?
• Do we seek external support early, or only after the crisis has escalated?

These questions may be uncomfortable. But they are far less expensive than insolvency.

The United Interim Economic Report 2026 clearly demonstrates that corporate crises often emerge when leadership recognizes problems too late, acts too slowly, or fails to listen.

That is why insolvency prevention is fundamentally a management responsibility.

Companies should mobilize every available resource to protect their business from insolvency, not when insolvency becomes imminent, but as soon as the first warning signs appear.

Sources:
Frankfurter Allgemeine Sonntagszeitung (May 30, 2026), “Where the Wave of Insolvencies Is Rolling”
FalkenSteg

United Interim, Economic Report 2026