• Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us
  • Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us

Can it be fixed? What will it cost? Is it worth it?

by Giles Campbell, CEO of Red Pike Capital

 

I’m frequently asked by shareholders of failing companies to review them for their turnaround potential, seeking the answer to a few key questions: Can it be fixed? What will it cost? Is it worth it?

Assessing the company

The primary objective is to develop a hands-on understanding of every component part of the business as rapidly as possible. To identify the major liabilities and risks as well as the key assets from a business standpoint, rather than a cash-value standpoint. This knowledge will be used in the creative planning process as well as the final evaluation of risk vs reward.

Assessing the Industry

I cannot count the number of small-scale printing companies that I’ve been offered to buy. It’s a declining industry and unless you’ve got the cash to develop another moo.com, then you’re unlikely to make any real money. Assessing the industry of the business and the adjacent industries is going to uncover potential areas of opportunity for future profit as well as give an overall picture of the likely direction of the company.

Assessing the management team

Your assessment of the management team’s attitude, aptitude and skills is a critically important factor in the turnaround analysis and will influence the entire future of the business. Having the wrong people in the team (ceo included) is the core cause of companies failing.

Creative Planning

The creative planning process involves assessing the “box of bits” that the company consists of in order to figure out what can be done with it to make money in the short and longer term. These two timeframes may generate different agendas, as short-term cash generative activities may not be sustainable or aligned well with the longer-term desired strong strategic market position, but both may be necessary in order to minimise the cash cost of turning around the business. For example, a manufacturing business that I turned around had a great core product range that was in need of revitalisation. This process of revitalisation was going to take several years of development work. In the short term there was a market opportunity in a fast-growing adjacent sector. The opportunity was likely to be short-lived as competition would heat up quickly but the rapid development of some carefully tailored products was perfectly practical and within 9 months 50% of the revenue of the company was coming from these products. Without them the company would not have survived, however, they were unlikely to be the long-term star product range either, due to their relatively simple, easy to copy design.

Financial Estimates

Turnaround financial estimates are difficult at best. Whilst some non-contributing costs may be cut, the transformation of the business is going to cost money and it is not something to scrimp on. If the transformation goes well then you may add hundreds of millions of pounds of value to the equity of the business. New product lines and new markets are difficult to predict precisely. This is an area where more detailed analysis is unlikely to deliver a better analysis. Big picture assessment is as accurate as you can get. Leave some room for the contingent liabilities that you’ve not identified. I’ve not run a turnaround yet where I identified where all the skeletons were buried in my pre-turnaround assessment of the company.

Turnaround Evaluation – the final assessment

In the final assessment, the question has to be: Is it worth it? Is it worth the cost, effort and risk of attempting a turnaround? What will the business potentially be worth to the shareholder that are considering funding the turnaround? What will it cost to get there? How long will it take and what are the risks? These are not going to be precise figures. At best they will be a rough estimate, as one thing is certain in turnarounds – they are messy and unpredictable. Ask the potential CEO what his gut feel is about the business. If he knows what he is doing then he can tell you, gut feel, if he can achieve the turnaround.

(c) copyright Giles Campbell 2015

 

Giles Campbell is a turnaround CEO who has led the successful turnaround of a wide range of companies, from retail fashion to electronics manufacturing, from £2m turnover to £100m. Awarded European Turnaround of the Year 2013 for recovering a central London Ad Agency, he is a speaker on turnaround leadership and advocate of hands-on company recovery. 

 

 

 

 

Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.

Categories

  • Bankruptcy (68)
  • Case Study (12)
  • Economy (51)
  • Events (23)
  • Finance (113)
  • Guest (19)
  • Insolvency (98)
  • Mediation (13)
  • Mr Bankruptcy (133)
  • Newsletter (9)
  • Other (14)
  • Personal Guarantees (13)
  • Press Release (18)
  • Turnaround (7)

Recent posts

  • Give yourself time to think, with the Debt Respite Scheme
  • Preserving your future aspirations in the face of unmanageable debt
  • How sustainable is your debt situation? Your credit report reveals all
  • Strategies for achieving financial freedom from debt
  • Understanding the differences between bankruptcy in England and Wales, and in Scotland

Archives

  • May 2025 (2)
  • April 2025 (2)
  • March 2025 (1)
  • February 2025 (2)
  • January 2025 (2)
  • November 2024 (3)
  • October 2024 (2)
  • September 2024 (3)
  • August 2024 (1)
  • July 2024 (1)
  • June 2024 (2)
  • May 2024 (1)
  • April 2024 (2)
  • March 2024 (2)
  • February 2024 (3)
  • January 2024 (3)
  • December 2023 (1)
  • November 2023 (2)
  • October 2023 (2)
  • September 2023 (2)
  • August 2023 (2)
  • July 2023 (2)
  • June 2023 (2)
  • May 2023 (3)
  • April 2023 (2)
  • March 2023 (3)
  • February 2023 (2)
  • January 2023 (1)
  • December 2022 (2)
  • November 2022 (1)
  • October 2022 (2)
  • September 2022 (2)
  • August 2022 (2)
  • July 2022 (1)
  • June 2022 (3)
  • May 2022 (2)
  • April 2022 (2)
  • March 2022 (1)
  • February 2022 (2)
  • January 2022 (2)
  • December 2021 (1)
  • November 2021 (5)
  • October 2021 (2)
  • September 2021 (3)
  • July 2021 (1)
  • June 2021 (3)
  • May 2021 (2)
  • April 2021 (2)
  • March 2021 (2)
  • February 2021 (2)
  • January 2021 (2)
  • December 2020 (1)
  • November 2020 (2)
  • October 2020 (2)
  • September 2020 (2)
  • August 2020 (2)
  • July 2020 (2)
  • June 2020 (2)
  • May 2020 (2)
  • April 2020 (3)
  • March 2020 (3)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (3)
  • November 2019 (1)
  • October 2019 (2)
  • September 2019 (1)
  • August 2019 (3)
  • July 2019 (2)
  • June 2019 (3)
  • May 2019 (2)
  • April 2019 (1)
  • March 2019 (2)
  • February 2019 (1)
  • January 2019 (1)
  • December 2018 (2)
  • November 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • March 2018 (1)
  • January 2018 (1)
  • May 2017 (1)
  • January 2017 (1)
  • December 2016 (1)
  • November 2016 (1)
  • September 2016 (2)
  • August 2016 (2)
  • July 2016 (1)
  • May 2016 (2)
  • March 2016 (2)
  • February 2016 (1)
  • January 2016 (1)
  • October 2015 (2)
  • September 2015 (2)
  • August 2015 (3)
  • July 2015 (3)
  • May 2015 (1)
  • April 2015 (1)
  • March 2015 (2)
  • February 2015 (1)
  • January 2015 (2)
  • December 2014 (1)
  • November 2014 (2)
  • October 2014 (5)
  • September 2014 (3)
  • August 2014 (3)
  • July 2014 (1)
  • April 2014 (3)

RSS FT News Feed

  • Artist Jenny Saville: ‘You always return to beauty, in the end’
  • Gerry Adams wins defamation case against BBC
  • US-China trade talks ‘stalled’, Bessent says
  • Drinks groups mount fightback as alcohol faces ‘tobacco moment’
  • UK fuel payment U-turn risks turning £1.5bn cut into net cost, analysts warn

Sign up to our newsletter

Useful links

  • Home
  • About us
  • Consultation
  • Blog & News
  • Press
  • Contact us

Solutions

  • Insolvency Support
  • Mediation
  • Negotiated Settlements
  • Personal Bankruptcy Experts

Social

  • Facebook
  • Twitter
  • LinkedIn

The Old Rectory Business Centre
Springhead Road
Northfleet
Kent
DA11 8HN

T: 0845 680 7217
E: enquiries@jamesrosa.co.uk

© 2018 James Rosa Associates Ltd. All rights reserved.