Turnaround Success or Failure

Not all turnarounds succeed. Many efforts do not make it all the way through the five stages. Some never get out of triage. Others manage to organize and implement an emergency plan but get no farther. A turnaround team may stop the bleeding - put a quick end to its disastrous losses - but find that the patient is too far gone to save. Nevertheless, there is benefit in this result. Turnaround teams can sometimes improve the financial condition of the company at least to the point where creditors are satisfied and the personal liability of the principals is less of an issue. In these situations, we may decide to sell the business to a company and/or management team that is better positioned and resourced. This outcome is not in and of itself failure. The company may well thrive and reach new heights under different ownership. In situations like this I play a key role in identifying prospective purchasers, managing the information disclosure process, and negotiating a successful sale of the business at a price that maximizes the capital available for distribution to existing financial claimants.

Ironically, some other companies never reach Stage Five because we realize significant success in the earlier steps. The turnaround can becomes so successful that the company becomes a target of a takeover bid. This is another example of why a company that does not make it through the entire process can still be seen as a successful turnaround. The company was saved and continues to perform well with stronger sales than ever before.

For those companies that do make it through the entire process, the measure is their continued growth. The objective of any turnaround is to put the company back on a solid footing and allow it to grow - become increasingly profitable - and realize its full potential.