Corporate Turnarounds

Today’s uncertain environment demands the financial and operational flexibility necessary to course-correct midstream and adapt to the unforeseen challenges and opportunities that will inevitably arise along the way. Financial and operational restructuring will be required for many companies struggling to remain viable and competitive.

A company can analyze forever, but if it can't implement the plan, the analysts is worthless. MSI's experienced professional know how to help companies resolve urgent crisis situations and implement effective and rapid organizational strategic change.

MSI professionals share a practical, results-oriented mindset and understand that in a turnaround situation, failure is not  a desired option. We work side-by-side with senior management in a dynamic restructuring environment to balance competing priorities; including closely managing liquidity, anticipating unforeseen risks and opportunities, and communicating with key constituents to keep them informed, engaged, and participating for the success of the restructured entity.

MSI understands how to build consensus among the key constituencies to effectively manage expectations and control the restructuring so that our clients can achieve their goals and the restructuring will be successful.

MSI has the experience and expertise necessary to help you gain control of a failing company and manage the turnaround process. We will intervene and work with the vendors, tax authorities, attorneys, and lenders and immediately develop a cash management system to maximize cash flow. Our next step is to review the operational systems and processes to determine the root cause of the business decline.

Corporate Turnaround management is a process dedicated to corporate renewal. It uses analysis and planning to save troubled companies and return them to solvency. Turnaround management involves management review, a full due diligence process, root failure causes analysis, and SWOT analysis to determine why a company is failing. Once our analysis is completed, MSI will develop a long term strategic and restructuring plan and begin implementation to successfully restructure and reposition the company. Restructuring plans may or may not involve a bankruptcy filing. Once implementation begins, the dynamic plan must be continually be reviewed and changes must be made to the plan as needed to ensure that the company returns to solvency.

There are five (5) stages in the repositioning of an organization:

1. The evaluation and assessment stage

2. The acute needs stage

3. The restructuring stage

4. The stabilization stage

5. The revitalization stage

Corporate Repositioning

MSI will utilize different techniques to reposition a company. The four main techniques are known as Retrenchment, Repositioning, Replacement and Renewal:

Retrenchment 

bigstock-Business-team-working-and-disc-14507195.jpg

Retrenchment strategy involves wide-ranging short-term actions, to reduce financial losses, stabilize the company, and work against the problems that caused the poor performance and decline of the business entity.  

When engaging in retrenchment it is sometimes necessary to reduce the scope and the size of a business. This can be done by selling assets, abandoning difficult markets, stopping unprofitable production lines, downsizing and outsourcing. These procedures are used to generate resources, with the intention to utilize the resources for more productive activities, and prevent financial losses. Retrenchment is about an efficient orientation and a refocus on the core business.  

Repositioning

Repositioning strategy; also known as entrepreneurial strategy; has as its main focus revenue generation with new innovations and changes in product portfolio and market position. This includes the development of new products, entering new markets, extrapolating alternative sources of revenue and modifying the image or the mission of a company.

Replacement

Replacement strategy; where top managers and/or the Chief Executive Officer (CEO) are replaced by new ones; has as its main focus to bring in new managers that will bring recovery and a strategic change, as a result of their different experience and backgrounds from their previous work. Replacement is especially qualified for situations with opinionated CEO’s, which are not able to think impartial about certain problems and the established leaders fail to recognize that a change in the business strategy is necessary to keep the company viable.

Renewal

Renewal strategy: where a company pursues long-term actions seeking a successful managerial performance. The first step is to analyze the existing structures within the organization. This may end with a closure of some divisions, a development of new markets/ projects or an expansion in other business areas.

Three (3) critical hurdles or challenges that management faces in any repositioning program:

1. Design: What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces?

2.  Execution: How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible?

3.  Marketing: How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price?