Turnaround management is designed to preserve
and add value to your business if it is failing to
meet performance expectations. Early intervention
can provide your business with the best chance of
overcoming a deterioration in financial performance
and avoiding formal insolvency proceedings.
Turnaround management can be applied
to businesses:
- Whose performance is below expectation or
when unexpected crisis occurs.
- Which have unprofitable divisions or
products.
- Who have failed to adequately cope with their
growth cycle, particularly as a result of
competitive pressures.
- Which have underutilised, or obsolete assets.
- Which have ineffective management,
management structures, or shareholder
disputes.
- Which are undercapitalised and/or are under
pressure from bankers, trade creditors and
other stakeholders.
Simply, the process involves analysing the business
and its financial data, identifying the problems
afflicting the business, formulating a strategy
and then implementing and maintaining the
recovery strategy.
In many instances, existing management will play a
key role in the process for all that may be required is
the input and energy of external advisors to address
what may be long standing issues that for whatever
reason management was either unwilling or unable
to confront. In other cases, the circumstances
may be such that changes to key personnel in the
organisation may be required.
By identifying and implementing turnaround
strategies early enough, recovery can take place
with minimum interruption and without the
trauma associated with a crisis situation. However,
sometimes, a restructuring may not be achievable
without the legislative protection that a formal
insolvency appointment can provide. For example the
appointment of a Voluntary Administrator and the
propounding of a Deed of Company Arrangement.
The role of turnaround management as compared
to workout and insolvency is best illustrated by the
following table:
| Details |
Objective |
| Turnaround |
Initiatives to achieve and
enhance profitability. |
| Workout |
Creditor led, with objectives
of reducing indebtedness and restructuring of financial and
operational activities. |
| Insolvency |
Distribution of assets to
creditors on an equitable basis. |
Turnaround and workout plans are specifically
designed to help prevent financially troubled
businesses from being liquidated. The work
is normally undertaken by external advisors
experienced in the area.
O'Brien Palmer has considerable experience in
turnaround management. We can assist financially
troubled businesses in such areas as:
- Crisis management.
- Cash flow and working capital strategies.
- Debt restructuring.
- Communication with stakeholders.
- Cost reduction initiatives.
- Lender negotiations.
- Business stabilisation.
- Disposal of non-core assets.
- Solvency advice.
Your timing can be the key to a successful turnaround
strategy being implemented. If you are considering
the use of O'Brien Palmer's turnaround management
skills, we recommend that you take the initiative and
act early, as this gives the best opportunity to achieve a
positive outcome for your business and yourself.
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