Corporate Renewal Industry

Corporate Renewal Industry Overview

Periods of economic and financial distress pose special challenges to the capabilities and decision-making processes of most professional management teams. Not only do such occurrences increase demands on existing managerial abilities, but they also create a whole new spectrum of legal, accounting, and financial considerations that impact the renewal process. Today’s increased competition, cyclical and volatile financial markets, and economic trends have created a climate in which no business can take stability for granted.

As once-stable, profitable, and competitive companies struggle to improve operational and financial performance, the expertise of corporate renewal professionals is critical to this revitalization process. The chances of successfully navigating the corporate renewal process increases through the use of qualified turnaround professionals, who have the experience and expertise to apply sound practices of turnaround management to failing businesses. While many companies have turned to downsizing as a stopgap measure to improve their economic health, downsizing alone has its own adverse consequences in that it thins the ranks of managers groomed to assume top positions. Moreover, a volatile business environment may turn once-successful, growth-oriented CEOs into hesitant managers who no longer can provide strong leadership during periods of retrenchment.

New lender liability laws also have increased the need for turnaround management. At one time, banks could take control of client companies that were in serious financial peril. Today, courts view this action as equity participation, forcing banks to avoid direct involvement with corporate management. A turnaround specialist, operating as either an interim manager or consultant, may replace a company’s CEO and temporarily take over the decision-making processes of a company to lead it toward stability. Alternatively, a turnaround professional may become an active advisor to a troubled company’s board of directors.

Advantages of a Turnaround Professional

A turnaround specialist enters a company with a fresh eye and complete objectivity. This professional can spot problems that may not be visible to company insiders and implement solutions.
Turnaround managers have no political agenda or other obligations to bias the decision-making process, allowing them to take sometimes unpopular, yet necessary, steps required for a company’s survival.

A turnaround manager’s experience within a particular industry is less important than experience in crisis situations when a company is facing bankruptcy or the loss of millions of dollars in revenue. Like an emergency room doctor, a turnaround professional must make critical decisions quickly to staunch the financial bleeding and give a patient the best chance for recovery.
Operating in the eye of the storm, a turnaround specialist must deal equitably with angry creditors, frightened employees, wary customers, and a nervous board of directors. Clearly this is no assignment for the faint-hearted.