How to Effect a Company Turnaround in the Credit Crunch

Company turnaround has been described as a three stage process, Rescue, Restructure and Recovery. When a debt advisor first takes a call from a company looking to turnaround its fortunes, they first look and see if they can rescue it. It will be likely that when they are called, the business has been in decline and difficulties for quite some time, and on occasions, years. With the credit crunch putting pressure on all businesses, they are finding that this pattern of failure of escalating. Usually the first task is to see if they can raise finance, and if so from where. If they can do that, they will ascertain where that is best allocated. A trading fund will be essential if they are to have the time to implement phase two. At this stage they will also talk to stakeholders, such as shareholders (if different from the directors), employees, creditors and customers.

With the immediate future of the company settled, they can now turn their attention to the medium and longer term position of the business. They will review all elements of the company structure, its trading and operations and seek efficiency savings where they may be found. Cost reductions will be a key element in producing profit which will then contribute to a secure future for the business. In addition they will investigate current and potential trading markets, assess management, and if need be, take the hard decisions required to make sure the future of the company is secure. Future financing is important and they have access to a full range of funders so that they will be able to place your requirements.

Once they have placed the company on a firm footing they will withdraw from the operation and complete a hand back. An advisor may not exit completely, as they are happy to offer ongoing support, on a consultancy basis.

All advisory services will be payable on a basis to be agreed, and an advisor will agree with you how their fees are to be funded. It will not be a cheap process, but when compared to contemplating the cost of failure of the business, it will appear significant value for money.