Restructuring & Turnaround is a multi-disciplinary field that guides the restructuring and turnaround process to implement sustainable strategic, operational, and financial change.
Restructuring is a modification to the financial and operational aspects of a firm, usually undertaken when financial pressures become prevalent. A turnaround is the transformation of a financially failed company into a successful one. Turnarounds are important as they bring stability to the future of a company. To execute a turnaround, a firm must understand that the problem is real, find a way to change the situation, and develop and adopt a new strategy to solve the problem.
Typically, business problems unfold in three phases, each requiring a unique action. During the first phase—a strategic crisis—the company is no longer able to compete effectively. Sales numbers may be stable or even growing, yet profitability begins to decline. Very often, management has attempted one or more new strategies without success. In some cases, management may not even recognize the scope of the problem.
If changes are not implemented, the second stage—a profit crisis—follows. This phase is characterized by declining sales and negative profit margins. As a result, the company starts depleting its cash reserves, creating an urgent need for a turnaround.
If corrective actions are still not taken, the final stage—a liquidity crisis—occurs. At this point, the company lacks the financial resources needed for current operations. The management team may lose its ability to make independent decisions, as implementing changes internally becomes nearly impossible. Debt holders, such as other firms or banks, may step in and demand to restructure the company on their own terms.
Restructuring & Turnaround Management Services may include:
