Restructuring

RESTRUCTURING ASPIRES TO TURN THE BUSINESS AROUND, NOT TO CLOSE IT DOWN

 

Restructuring or business turnaround is 360-degree reorganisation of a company in order to secure its strong market position and healthy operations on a long-term. For state owned enterprises in Serbia the government use “UPPR” which is a temporary restructuring plan prepared in advance to suit all distressed companies. The plan is only designed to keep these enterprises “alive” under government subventions and by-law protection from their creditors with almost no attempts to resolve the real problem of non-competitiveness and inefficiency. As current management (pre and during “restructuring”) could have never figured out how to do the turnaround on their own the state is (desperately) chasing foreign investors throughout the world. Foreigners are expected to bring viable strategies and make a Serbian company part of their global network. The alternative is to wait for the company to cease to exist anyway due to natural attrition and retrenchments.

It is important to understand that the true reasons for current situation rarely rest in poor financial management or wrong capital structure at the first place but in poor (outdated) business model, lost market share and lost sales, declined competitiveness of company’s products and services and loss of most perspective employees. In essence, if the objective for any restructuring is business turnaround then those issues have to be addressed right from the beginning. Restructuring team has to set new business model and organisational structure that can secure company’s adaptation to new market conditions and delivery of competitive products and services to customers while growing its market share – all resulting in sustainable profits and positive cash flows. Restructuring of debt and capital structure is only a single step in company’s turnaround process as it, if performed on its own, would bring only a temporary relief but not a resolution to real inefficiencies that caused the problem at the first place.

If a company fell into trouble and restructuring is deemed necessary, it is hardly to believe that the old management team who brought the company into unfortunate situation could drive it out on their own. They will definitely need some new blood and/or help from outside. Probably a new management team with good company turnaround and change management experience and/or consultants to guide and facilitate existing managers on a road to recovery.

My mission as a turnaround specialist is to help clients develop a sustainable business including capital structure, business model and cash flows by developing distinctive and sustainable competitive advantage inside and outside their business. I work closely with clients on identifying opportunities and developing strategies, skills, processes and business information systems that create value for all stakeholders and move business away from old practices that caused the trouble. As there is no single right way to execute change I will adjust joint approach and customise the program to develop a path that best suits your organisational culture, needs and the level of organisational capability as identified during the assessment.

Download my free white paper about how to start a COMPANY TURNAROUND PROCESS. You will learn how to approach planning of such a complex and risky operation, how to compose a team and where to start.

Read my text TURNAROUND PROCESS to learn how to concentrate on quality of business model, marketing, sales practice, revenue, supply chain structure, cost structure and that of your capital. Start with creating sense of urgency and analyse the situation to uncover financial, operating and market position weaknesses as well as opportunities to enable building viable scenarios for restructuring and turnaround. These may involve new capital injection, sales of part of the business, downscaling, withdrawing some products or services, or withdrawing from certain markets, entering strategic partnership, launching new business model/products/services etc.

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