Turnaround Management Advisory
Turnaround Management is nothing but revival of a financially stressed business. Such a revival should be a sustainable one on a long term. We have the expertise to provide advisory and strategy for turning around a financially stressed organisation and we will provide a multi- step road map to bring the organisation out of the stress and put it on the growth & profitable track.
A company may face financial crisis due to different reasons- it can be due to or a combination of many factors such as high finance costs, low market share, high product costs and continuous losses, obsolescence in technology, poor governance, change in Govt policies Our first step will be to ascertain the major factors that impede performance of the company and leading to financial crisis. This diagnosis will provide the line and sequence of corrective action that need to be taken up in mitigating the crisis.
Concurrently with step 1 a detailed SWOT analysis for the Company will be carried out. Such a SWOT will focus on both external and internal environment highlighting the critical risks and weaknesses so also the key strengths & opportunities.
The next step shall be assess the business viability and sustainability of the organisation using SWOT and possibility of the Company to pull through the crisis. The viability assessment will be based on additional investment required, capital restructuring ,change in product portfolio, value chain analysis, strength of competition, technological changes in the industry of operation etc.,
Crisis Stabilisation It is extremely important for a company which going through a crisis to manage & survive in the short term. Keeping the head above water is the key. The management phrase’ If you don’t survive the short term there is no long term. This is all the more true to companies which are stressed but have to be turned around. Therefore we will provide the company with a tactical plan to manage its cash in the immediate /short term. Focussing more on clearing the inventory by offering attractive price & cash discounts & speeding up collections. The Company should also negotiate longer credit terms, deferred payments with suppliers with an assurance of improved offtake in the future etc.
Once the crisis gets stabilised, We will work on evolving a long term turn around strategy for the Company. This will be essentially consisting of
- New or improved leadership– to look at making changes at the leadership level, bring in new proven talents from outside, enabling fresh ideas, innovation etc
- Stakeholder focus– engaging with all stakeholders including lenders, creditors, employees, customers, and the industry association and bring back their confidence & interest in the Company’s growth.
- Strategic focus –identifying core competencies ,redefining the core business, restructuring, M&A, divestment, breaking value chain.
- Organisationalchange & restructuring – to align the org structure with the long term turnaround strategic goals , Training & development of inhouse talents, improving communication, oragnisational stability.
- .Process & Operational improvements– operational improvements that can be taken up without much investments, process changes resulting in improved productivity focus on improved cost management.
- Topline activation & capacity utilisation : concerted efforts to enhance capacity utilisation and growth in sales will be taken up. There will be more emphasis getting good sales traction and as this gains momentum, gains from cost management initiatives as well process & operational improvements will result in increased profitability.
- Financial restructuring– implementing intensive cash flow management and focus more on cutting down the cash generation cycle. This will involve optimising all the components of working capital. Working with the Banks & obtain improved terms both funded & non funded facilities, moratorium or restructuring interest payments. Looking capital restructuring and advise on bringing in new investors ( Strategic/Financial) to reduce the leverage & improve servicing of loans. asset reduction or selling under-utilised assets / impaired assets to generate cash etc.,.
The final step in turnaround will be to have a key time-bound implementation of the strategies decided in step 5. Depending on the timelines and complexities involved, we may suggest setting up of an apex advisory board consisting of the top leadership team & technical/financial experts. We will also breakup the strategies decided in to groups of action points & activities and identify internal teams implementation of activities of each group. . If necessary, we may advise tp bring on board a Chief Restructuring Officer whose role will be to implement the turnaround strategy – this allows management to maintain focus on their core skills.
Structured Review Mechanism
With all the planning and implementation in place, it is important to have a structured review mechanism. This will ensure not only that continual improvement is achieved but also helps to identify any corrective actions that may be needed. A quarterly review report should be presented to the board of directors for the board to advise changes, improvements that may be needed in the implementation process. There will be a hand-holding from our side post implementation for about 6 months to ensure that the turnaround starts yielding fruits in a sustained manner.