Businesses in Distress: Is Your Company a Candidate for Failure?

      Turnaround Managers and Outside Directors

            Can Fix Problems and Find Financing



Journal of Working Capital Management, published an Article of Interest by John M. Collard, turnaround specialist, interim executive, outside director, and private equity advisor. Journal of Working Capital Management is published by Warren, Gorham & Lamont.

www.StrategicMgtPartners.com 

www.StrategicMgtPartners.com/jwcm.pdf

Article-of-Interest:

Businesses in Distress: Is Your Company a Candidate for Failure?

      Turnaround Managers and Outside Directors

            Can Fix Problems and Find Financing



By John M. Collard

Understanding why businesses fail can help the corporate financial manager recognize the ominous signs that portend trouble. Roughly 80 percent or more of business failures are traceable to internal or management controlled factors. These factors are many, including:

• Autocratic management

• Ineffective communications

• Neglect of human resources 

• Inefficient compensation and incentive programs.

• Company goals not understood or achieved.

• Deteriorating business

• Inadequate analysis of markets and strategies.

• Lack of timely and accurate financial information.

• History of failed expansion plans

• Uncontrolled or mismanaged growth.

Companies Susceptible to Trouble

How Do You Diagnose Trouble?

What are the warning indicators of a business heading toward trouble? This is one of the most frequently asked questions of turnaround specialists. Trouble comes from a variety of circumstances. The obvious signals are rarely the root cause of the problem. Losing money; for example, is not the problem; it is the result of other problems.

Making a Commitment to Change

Management must attempt to understand its business needs, and it should be willing to face some highly difficult issues. With statistics generally pointing to mismanagement at the root of most crises, management should adopt a mindset that it wants to participate in the recovery, that it may need the help of a turnaround specialist to be the catalyst to the recovery, and that it wants to learn as much as possible so that it can better manage the business on the other side of the turnaround engagement. Therefore, management should ask itself some hard questions.

The Recovery Process

• Fact Finding

• Analysis of the Facts

• Preparation of a Business Plan Outlining the Courses of Action

• Implementation of the Business Plan

• Monitor the Business Plan

• Stabilization and Transition

Turnaround Financing For Distressed Companies

The owner or manager of a distressed business typically believes that raising more money will solve the company's financial problems. However, management must recognize that a shortage of capital is often only a symptom; it usually is not the primary problem. Although additional dollars are necessary to implement needed changes, a successful turnaround must first resolve the problems that produced the cash crisis.

Financing Strategies

Turnaround Financing Specialists

Turnaround Equity Investors

Financial Investors

Strategic Equity Investors

Experienced turnaround specialists also have networks to assist their clients to find the funds necessary to fuel the recovery.

Selecting a Turnaround Specialist

How the Turnaround Specialist Operates

Resistance to Turnaround Specialists

Do Not Expect Miracles Overnight.



A turnaround itself can take years of hard work to achieve. The turnaround specialist can only be a catalyst for change. Owners and managers still must make difficult decisions to enable the turnaround process to occur.

Ultimately, a success or failure of a turnaround rests on the shoulders of a business' most valuable assets: owners, management, employees, creditors, lenders, and turnaround specialist. All must be fully dedicated to turning around the company. Outsiders will watch performance, credibility, and commitment of a company's management, employees, and turnaround specialist before giving the cooperation necessary to make the turnaround possible.

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About the Author: John M. Collard

John is a Certified Turnaround Professional (CTP), and a Certified International Turnaround Manager (CITM), who brings over 35 years senior operating leadership, $85M+ asset and investment recovery, 43+ transactions worth $780M+, and $80M fund management expertise to run troubled companies, serve on boards, advise company boards, litigators, institutional and private equity investors, and raise capital. John has parachuted in as the Interim CEO or senior executive to turn around a trouble entity, and serves as an outside director.  John is Chairman of Strategic Management Partners, Inc. (410-263-9100, www.StrategicMgtPartners.com ) in Annapolis, Maryland.  John is inducted into the Turnaround Management, Restructuring, and Distressed Investing Industry Hall Of Fame. John is Past Chairman of the Turnaround Management Association (TMA), and Chairman of the Association of Interim Executives (AIE).  John is among the Regional Manufacturing Institute's Constellation of Stars, honoring those individuals whose outstanding contributions have advanced the Maryland Manufacturing industry, and saved jobs in Maryland. John is the 2010 Prince George's Business Leader of the Year. John is 2012 winner of Corporate Intl Magazine Global Award for Corporate Recovery specialist of the Year.

About the Firm:

Strategic Management Partners, Inc. (www.StrategicMgtPartners.com 410-263-9100)  is a turnaround management firm specializing in interim management and executive CEO leadership, asset and investment recovery, corporate renewal governance, board and private equity advisory, raising capital, and investing in underperforming distressed troubled companies.  SMP helps clients restore value to troubled companies, prepare entities for 'cash out' at maximum value, recover assets for fund investors, support litigation, and invest private equity into distressed opportunities.  The firm has been advisor to Presidents Bush (41 & 43), Clinton, Reagan, and Yeltsin, World Bank, EBRD, Company Boards, and Equity Capital Investors on leadership, governance, turnaround management and equity investing. SMP is celebrating 25 years of service to its clients. SMP was named Maryland's Small Business of the Year, and received the Governor's Citation, Governor Martin J. O'Malley, The State of Maryland as a special tribute to honor work in the areas of turning around troubled companies and saving jobs in Maryland.  Turnarounds & Workouts Magazine has twice named SMP among the 'Top Outstanding Turnaround Management Firms'.  American and Baltimore Business Journals named SMP among the Most Active Turnaround Management and Consulting Firms in Baltimore, Washington, and the Mid-Atlantic Region.  Global M&A Network Turnaround Atlas Awards named SMP as Boutique Turnaround Consulting Firm of the Year . SMP is 2012 winner of Corporate Intl Magazine Global Award for Interim Management Specialist Firm of the Year. SMP is 2013 recipient of the Turnaround Management Firm of the Year by Acquisition Intl Magazine.

Strategic Management Partners, Inc.: turnaround managers ready to run troubled companies, recover assets from investments gone bad, advise boards of directors and investors on company viability in distressed situations.  We provide strong interim and operational leadership, strategic planning, financial, defense conversion, sales and marketing acumen developed building organizations in large and small companies, including President of public & private middle-market companies providing solutions to Commercial, Federal Government, International markets. Enterprises range from start-up to $100+mil. Industry expertise: Manufacturing; Job Shop; Engineering Services; Computer Processing/Services/Software/Integration; Communications; Defense Electronics; Aerospace; Federal Government Contracting; Systems Integration; High-Tech; Finance; Marine Services; Real Estate Development; Construction; Fabrication; and Printing.

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Reference:

www.StrategicMgtPartners.com   Turnaround Managers

www.StrategistLibrary.com  or  Strategic Management Partners, Inc. Library

See formatted version at: www.StrategicMgtPartners.com/jwcm.pdf Or www.StrategicMgtPartners.com/library/wcm1.html

Is Your Company in Trouble?  Published by Corporate Board Magazine

Managing Turnarounds in Times of Crisis Published by NACD Directorship Magazine

Managing Turnarounds Phases and Actions Published by RMA Journal

Benefits of Interim Management Article

Collard on NewsReleaseWire

Social Media:

John M. Collard on Facebook at  http://www.facebook.com/JohnMCollard

John M. Collard on LinkedIn at  http://www.linkedin.com/in/JohnMCollard

John M. Collard on Twitter at  http://twitter.com/JohnCollard

Chairman of the Association of Interim Executives (AIE).

Past Chairman of Turnaround Management Association (TMA). Collard Writings.

Associations:

www.InterimExecs.org   Association of Interim Executives

www.Turnaround.org   Turnaround Management Association

Firm:

www.StrategicMgtPartners.com  Turnaround and Interim Management Experts

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