Company Turnaround
Transforming a loss making company into profit making one involves two key stages – stabilisation and then implementation.
What is company turnaround?
Company Turnaround is a widely used word to describe a business that is experiencing difficulties and needs some form of resolution.
We at Opus believe true Turnaround is much broader than that. Especially if the process is going to create real value in the longer term. Simply addressing the symptoms e.g. with the introduction of additional funding, doesn’t cure the underlying problems. It just serves to mask them in the short term.
When these problems start, the leaders of the business will likely be dealing with the issues as they arise. Often, on a one off, firefighting basis. This process will slowly become more and more a part of their daily routine and increasingly divert them away from the day job.
It is our experience that the problem issues if left unresolved, will grow or re-occur at a later date. This can often cause potentially irreparable damage to the organisation.
Acknowledging the distress signs
Whatever the underlying issues, the need for a company turnaround will invariably first become apparent with a tightening of the company’s cash flow. There will possibly have been a recent build-up of debt and increasing pressure from disgruntled creditors. This will sometimes include HMRC commitments with outstanding PAYE and VAT payments.
Invariably there will be additional factors that are worsening what is already a difficult situation, such as:
- Debtors taking ever longer to pay
- Cost increases
- Slowdown in sales
- Funders withdrawing support
- Bad debts
- Employee issues
Preserving business value
The team at Opus have significant experience in identifying and resolving these issues. Our sole aim is to preserve Shareholder Value. In our experience there is invariably a way we can achieve this.
Lead Partner, John Thompson has turned around the fortunes of many businesses experiencing these issues. This includes his own business, which he turned around and sold to a PLC within 2 years.
It is worth confirming that we start from the basis that the turnaround will avoid the need for any formal Insolvency Process.
Finance for company turnaround
The first stage of the turnaround process will be to stabilise the situation and stop any haemorrhaging of cash. If allowed to continue this will of course be terminal.
The company’s lenders are very often already aware of a deteriorating cash flow situation.
Opus have links with all the traditional funders and many providers of specialist Turnaround Finance.
We work very closely with all these finance companies to ensure they are fully bought in to the agreed plan and that there are no surprises that could potentially jeopardise the situation.
We seek to introduce new funding as needed to facilitate the Turnaround Plan.
Advice on company turnaround
If you would like to explore your ideas with a company turnaround specialist, contact our team today so we can identify how we can best support your plans and turn your business around.