Operational Turnarounds
If your company is in a tight spot,Stanton Associates can help
Stanton Associates provides practical, roll-up our sleeves assistance to companies facing challenges, including at times of crisis. We have the experience and the smarts to deliver not just short-term fixes but also long-term solutions for growth and profitability. We have worked with companies of all sizes and in many different industries. (Click here to download our Turnarounds brochure.)
Unlike a lot of other firms, we go beyond the financial engineering steps to tackle the core operational and strategic issues that caused the company to sink into the soup to start with. If that is not done, the turnaround is really just harvesting organs – not setting the stage for future success to create value for all stakeholders. We have the experience to dig in and take the action necessary to get the company the “right way up” and then we address the underlying sales, marketing, overhead, and other operating issues to get revenue and profits flowing again.
How we work
We refer to what we do in our practice as Operational Turnarounds because that encompasses the sub-sets of crisis management, financial restructuring, and operational restructuring. Not every turnaround is a crisis, and a financial restructuring may not be needed. Typically, a crisis (see our Crisis Management section) means that there is very little cash left, vendors are not offering “terms”, payroll is at risk of not being met, and certain members of senior management (and sometimes all) have left the company. A “Financial Restructuring” involves significant modification to debt terms and arrangements with creditors, perhaps including exchanging debt for equity on some basis.
It may be that the company is not yet in a crisis, but all the trend lines point in that direction, in which case there needs to be a turnaround – thus the term. The company may have a diminished but nevertheless strong balance sheet. But, it or one of its business units is underperforming. Alternatively, there may be a true crisis. Stanton Associates has helped in all of those situations with skillful, calm, yet rapid advice. We can step in as interim management in various roles, to the extent that is required, but we hope we can get involved early enough to work with management to effect business improvements that avoid a crisis and bring the company back to the path of growth and profitability.
Almost no company evolves from inception to market dominance in a straight line of uninterrupted success. There are many “inflection points” at which, sad to say, the majority of companies fail. By sheer numbers, most fail in the first few years after they open for business (we have an Early-Stage company practice to help avoid that fate). Most companies, once they get going, pick up momentum and do well, but as they grow the game changes. Often, with success, the ability to fly under the radar of the Fortune 2000 goes away. In fact, many large companies quite systematically let small ones forge a path and “prove” the demand for a new product or service, and then they swing round their big guns and open fire – moving rapidly to claim that turf for themselves! But there are many other possible challenges: technology, government regulation, economic factors, global competitors, and internal organizational development and management issues, to name but a few.
In summary, getting into a tough spot is not that unusual. How it is dealt with, however, is critical. Rather than the company becoming one of the “statistics,” Stanton Associates can help you navigate the rapids, resolve the myriad of operational and financial problems, and emerge a strong, healthy company.
Six Steps to Success
In all circumstances, one starts with a situation analysis: how bad are things really? How tough do the action steps need to be? The business sequence follows a straightforward logic: 1. Situation analysis. 2. Maximize cash flows to avoid running out of money. 3. Determine reliability of information and usefulness of internal controls and reporting systems and take corrective action quickly if necessary (and revisit item 2.). 4. Create performance monitoring systems to track key performance indicators at least weekly, and that hold everyone accountable. Establish clear and simple incentives for the whole company (not just senior management) based on company and individual performance (initially the incentives will probably have to be non-cash). 5. Dig into the business plan. What is the strategy? Prepare a detailed executable plan that charts a path to success. 6. Present plan to creditors and obtain their buy-in and support.Stanton Associates Turnaround Brochure March 2007.pdf