Turnaround Management – An Overview
Goal of Turnaround Management
The purpose of turnaround management is to:
- Determine if the business is still viable or what is required to restore viability
- Develop and implement a turnaround management plan
- Rebuild bank support
- Restore shareholder value
What’s Involved in Turnaround Management
- A review of operations and financial performance (ie. P&L, BS, Cash Flow, finance systems and controls etc.)
- Development of revenue enhancement &/or cost reduction plans
- Cash flow and working capital management (debtors, creditors, stock)
- Critical assessment of management team, business plan and forecasts
- Assessment of appropriate debt structure and bank security issues
- Assistance and advice on the sale of a business or division etc.
- Assessment of other corporate finance alternatives such as buying a competitor etc.
- Development, implementation and monitoring of the turnaround strategy
- Project managing the turnaround strategy
Possible Outcomes of a Turnaround Management Process
The following is a summary of the typical outcomes of a turnaround management process:
- Streamlined, viable business
- Bank agrees to support the restructuring plan
- Sale of the business or of non core assets
- Merger or acquisition of a competitor
- Debt facilities are refinanced with another bank
- Adequate controls are put in place to manage the business
- Restored shareholder value
In summary, if steps are taken early to address the causes of underperformance then appropriate measures can be put in place to develop and implement a successful turnaround management strategy.
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