6. WHEN IS A TURNAROUND COMPLETE?
When the company is successfully repositioned, restructured and
re-engineered, its viability is restored on a sustained basis. At that
point the turnaround is complete.
In my opinion, in a non-seasonal business, the requirement of
viability on a sustained basis requires at least two sequential quarters
of attractive financial results from regular operations plus a
reasonable balance sheet and a new solid management.
The new management has to be solid enough that the errors and
omissions that led the company into trouble are not likely to be
repeated while this team is in charge. Not all turnaround specialists
include the formation of management that succeeds them as part of their
package of turnaround services. I do, because I feel that even if
financial results are positive, a sustained basis is not necessarily
achieved until the successor management team had successfully taken over
responsibilities from the turnaround team.
For this reason my services include the formation of the successor
management team. Furthermore, I would work with these people for some
months after the company has returned to viable operation in order to
make sure the new team is on the right track.
This new team may include the most valuable human resources amongst
your present staff but after the turnaround they will operate in a very
different way from how things were done when the company got into
trouble. The new team will continue the questioning, evaluating, and
energetic attitude of the turnaround team. See the next Section for more
information on management requirements for the turnaround.
|