Turnarounds - Crisis management
This assignment is one of the most common in our history of twenty years of activity in the business, a fact confirmed by data on assignments carried out since 1989.
When the company is ailing, it means that its finances are under severe stress. This is due to negative economic results for more than three years, resignation of key people and difficulty in obtaining credit from banks and suppliers. A severe crisis usually leads to bankruptcy proceedings or loss of ownership of the company and sell-off to third parties. To avoid either of these undesirable outcomes there is the third option of temporary management. This was understood immediately in the early nineties by entrepreneurs from small and medium size companies who were facing crises and were absolutely determined not to give up control of their businesses.
After carrying out the check up on the client company, Contract Manager is in a position to understand if the company meets the conditions for turnaround, and draw up a restructuring plan that will put the company back on its feet through the assignment of experienced managers for a fixed period of time. Once the turnaround has been achieved, the company can return to its normal business life without having to resort to bankruptcy proceedings, or worse still, sell ownership to a third party.
DEVELOPMENT OF KNOW HOW
Clearly a company is only suitable for turnaround if certain conditions are met. First of all there must be a valid, market-oriented product or service. Secondly the company or product brands should have a good image on the market. Lastly there must be a demand for the products. The future of the company lies in meeting these three conditions. Otherwise even the best of managers can achieve nothing. Moreover there have to be the financial resources to cover both the losses and the turnaround, and the owners have to be prepared to put the necessary capital into the company. Without new investment the outcome can only be sell-off to new owners, who will recapitalize, restructure and relaunch the company in crisis, taking advantage of its product, image and know how. If there is no base to build on, there is no alternative but to resort to bankruptcy proceedings until the company is eventully wound up, which is obviously not a desirable outcome.
Assignments in this area usually last about two to three years.
