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On a selective basis, we do turnaround consulting. On a national scale,
this type of consulting shows a 20% success rate. The primary reason is
that turnaround consultants are often not brought into a situation until it is
too late. We are often faced with mitigating the depth of the problems while
we help our clients to an orderly conclusion of their affairs. We do get
to win, however, and in those cases, our clients listen to us and follow our
advice.
We provide a number of services when we perform turnaround work. They
include:
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Survival Plans:
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Working with our clients, we prepare survival plans
so we can resize the business to a working level that produces positive
cash flow.
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Creditor Negotiation:
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We negotiate creditor payment arrangements that give
us time to restructure, return to profitability and then commence
repayment of debt. Repayment may be 100% or some negotiated
reduction of the original amounts.
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Cash Flow Planning:
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A great deal of time is spent in cash flow
planning activities. It is in
this area that most turnaround clients lack understanding at it relates to
their business. We teach our
clients how to collect their accounts receivable and how to pay their
bills. We make sure that
taxes are deposited or paid on a timely basis.
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Facilities Analysis:
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This analysis deals with physical buildings and
supporting assets. We look
for consolidation opportunities. We
close facilities that do not fit the survival plan.
These choices often require creditor negotiation because the
sellers of the world make it very easy to lease assets. In right sizing the asset mix, it is often necessary to
terminate leases. We attempt
to do this at the least penalty to our client.
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Spin Offs:
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We look for opportunities to spin off excess assets
in order to mobilize cash as we work for survival. In some cases this is an
outright reduction of facilities. In other cases, we have been able
to sell company assets within the framework of a franchise. This latter technique
provides a basis for our clients to maintain their concepts and in the
eyes of their customers never appear to be in trouble.
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Internal Controls:
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We establish internal controls and implement rules of
behavior to assure our chances for survival.
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As a group, business owners often do not understand how to save
themselves. They are reluctant to accept they have a problem and indeed
they may be the problem. In attempting to fix themselves, they often sell
the company's jewels because they are the easiest to sell to raise survival
cash. During this process, they are often unwilling to identify or see
their problems and take the steps necessary to assure survival. As a
result, we often do not see them soon enough to save them. Where we can
save them, the rewards are high for all of the parties concerned.
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