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Sunday, 03 March 2013 22:00

Turnarounds & Restructuring Q&A

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What’s the single biggest obstacle a company needs to overcome to achieve a successful turnaround or restructuring? Is it financial or cultural?

“They need to overcome their own ego. They tend to take the failure of the business as a reflection of them personally. They have to get over it.”
– Chip Hoebeke, Rehmann

“They have to let the process unfold. A lot of times it’s forced on them. …The bankers are telling them that in order to have credit extended to them, they have to hire somebody that they really don’t want to hire, so they don’t participate fully in the process. They don’t think they get the value out of it as a result and the company goes nowhere.

“What I tell a lot of prospective clients is that in order for this to work, you have to buy in. I can get a lot of knowledge from the existing management team if they work with me and I can help formulate a game plan and what their workable solutions are.

“You have to do it through collaboration.”
– Patrick O’Keefe, O’Keefe & Associates

In your experience, is there a common issue you find among distressed companies that gets them into trouble?

“Everything always comes down to one thing, and that’s leadership. Leadership is the driver of everything else. Leadership does matter. If you have a weak financial system, that’s a thing that leadership has not identified and addressed. Those kinds of things are symptoms of leadership gaps.

“A lack of a clear defined, documented strategic plan that highlights competitive advantages – that is a lack of leadership. Everything else is just a symptom.

“If what we have is a business that has a concentration of customers – maybe one or two key customers that make up the business and maybe one of those customers goes away – people say, ‘Well, I lost a big customer and got myself into trouble.’ (But) it’s a leadership gap. If you identify that you have a concentration of customers, you need to have a strategic plan that remedies that.”
– Doug Wilterdink, DWH Corp.

“Exposure to debt. ‘We took on more debt thinking, well, we’re going to grow enough to service it later.’ That happened for years and then in 2009 it stopped.”
— Chip Hoebeke, Rehmann

“Exceptional growth will kill an organization” because management is unable to properly manage or finance the growth. “Going through that transition sometimes is like going through the sound barrier.”
— Dan Yeomans, Amicus Management Inc.

Read 2235 times Last modified on Thursday, 07 March 2013 12:57

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