Support to Executive Management and Shareholders to deliver successful business turnarounds and enhance profitability and liquidity
In crisis situations, we provide hands on support to Executive Management and Shareholders to deliver successful business turnarounds and enhance profitability and liquidity.
The process of turning around a troubled company is complex and made difficult by the multiple constituencies involved, all having different agendas. Lenders want their invested capital returned, preferably with interest. Creditors want to get paid for goods and services. Original investors want and hope for recovery of their capital, while distressed investors want to buy in cheap and turn a profit, some by trading the credit and others by turning the business positive and then selling. Owners want to avoid guarantees and recoup some of their equity. Employees want to retain their jobs and benefits. Directors want to avoid risk and litigation. Other stakeholders want their interests protected. These varied desires often can be at odds with one another and hamper the turnaround effort.
Many causes contribute to business failure. Most failures are related to influences that management could control, with majority rooted in internally generated problems that management did not control. Businesses fail because of mismanagement. Sometimes it is denial, sometimes negligence, but it always results in loss. Mismanagement is most often seen in more than one of multiple areas:
Autocratic management and overextension.
Ineffective, non-existent communications.
High turnover and neglect of human resources.
Inefficient compensation and incentive programs.
Company goals not achieved or understood.
Deteriorating business and lack of new customers.
Inadequate analysis of markets and strategies.
Lack of timely, accurate financial information.
History of failed expansion plans.
Uncontrolled or mismanaged growth.
To engineer a successful turnaround, a company needs someone with clear thinking to quickly assess opportunities, to determine what is wrong, to develop strategies that no one has tried before, and to implement plans to restructure the company. The problems are rarely what management indicates they are, but rather are usually two or three underlying, systemic ills that often can be fixed. Management has allowed these problems to exist and bring the company to its depressed state. Therefore, management is not equipped to manage the turnaround. Management will focus on the symptoms; the advisor will find and fix the real causes.
In these circumstances, turnaround advisors are often an excellent choice. They bring a new set of eyes trained in managing and advising in troubled situations. These experts are either practitioners or consultants. Turnaround practitioners take management and decision-making control as chief executive officer or chief restructuring officer. As an alternative, turnaround advisors can advise management, perhaps the same management that failed before.
The key to turnarounds is building enterprises in which future buyers want to invest. Investors and buyers look for businesses that:
Create value and exhibit consistency from period to period.
Have a high probability of future cash flows or have a history of performance and improvement or the promise of cash.
Possess a market-oriented management team with a focus on producing revenue.
Can sell and compete; to develop, produce, and distribute products; and to thrive and grow as indicated by a track record or demonstrated changes in the right direction.
Exhibit a fair entry valuation and realistic return potential.
There is a process of recovery and investment in a turnaround. It is based on the fundamental premise that management is lacking when companies are in trouble. Turnaround advisors will conduct factfinding to assess the situation and then prepare a plan to fix the problems. They must implement the planned courses of action by funding the process and building a team to carry it out, then monitor progress and make changes where necessary.
Senior hands on support to executive management gets control of cash management, identifies the underlying driver for the crises, make a restructuring plan and assists the executive management to make the right decisions during execution
By involving all financial stakeholders, the liquidity for the restructuring is secured. In next step the company is scaled and developed to secure profitability by transparent and best practice management and production principles and to meet marked demands and pricings.
A turnaround advisor helps owners, investors and lenders securing their invested capital on a short term by stopping the bleeding, and to grow it on a long term by implementing industrial leading management and production practice.
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We work with ambitious leaders who want to define the future, not hide from it. Together, we achieve extraordinary outcomes.