Diagnostic Review

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Purpose of the Diagnostic Review

The Diagnostic Review is a complete and independent assessment of a troubled business to determine short-term survivability, and longer-term viability from a strategic, organisational, operational and financial point of view.

The Diagnostic Review is custom designed to remove uncertainty about the future prospects of a distressed or underperforming business.

This specialised turnaround situation assessment is regularly requested by management, investors and banks as a business case

It provides them with a definitive answer whether to embark on a turnaround, what a loan workout programme should look like, or or whether to sell or close a business.

If a turnaround is found to be viable, the Diagnostic Review provides a detailed turnaround plan containing the high level turnaround strategy.

Features of the Diagnostic Review

Diagnostic Review

Click on the thumbnail of the Diagnostic Review diagram for an enlarged view of its framework and logic.

 

  • Provides an independent perspective of the true "As-Is" status of a troubled business, its markets and the industry it competes in, from a strategic, financial, organisational, operational, leadership and stakeholder point of view.
  • "Could-Be" assessment relative to targets, benchmarks, best practice.
  • Gap analysis - SWOT, key issues affecting short-term survivability and longer-term viability, constraints, causes of decline & distress, drivers, operational and financial levers, resources required.
  • Issues assessment - how to resolve issues and overcome constraints, expenses/ investment required, benefits, options, risks, trade-offs.
  • "To-Be" design of turnaround strategy and actions to address identified business issues.
  • Identification of quick wins that can be achieved with little delay and effort.
  • Financial assessment - modeling of impact on profit, cash flow, funding needs, and debt repayment scheduling.
  • Business case comparing costs with benefits to be achieved.
  • Conclusion as to the viability of the business.

 

Diagnostic Review

Click on the thumbnail of the Diagnostic Review diagram for an enlarged view of its options assessment logic.

 

  • Recommendation of the best future course of action, be it turnaround, or options associated with dissolution or disposal.
  • Design of a high level turnaround plan if business is viable

The design of the Diagnostic Review depends on the Diagnostic Probe findings and requirements of stakeholders e.g. management and banks.

In severe crisis situations, it is often advisable for the Diagnostic Review to be combined with emergency management, the first stage of the turnaround process.

For the underlying philosophy underpinning the Diagnostic Review, please see turnaround situation assessment.

Diagnostic Review execution

Project office

We normally run a project office on the client site.

Depending on the size of the Diagnostic Review, it is normally staffed by 3 - 8 consultants executing the relevant streams of work (see below) together with joint team members from the client company.

Typical streams of work:

  • Strategy, including market & industry assessment
  • Sales & marketing assessment
  • Supply chain assessment
  • Financial assessment and modeling
  • Leadership assessment
  • Project management

Diagnostic Review duration

The duration of the Diagnostic Review varies from:

  • 2 weeks for a small single-business company, to
  • Up to 8 weeks or longer for large multi-business groups.

Diagnostic Review cost

Typically, the fee structure is either a fixed fee based on planned person-days and expenses, or based on actual person-days and expenses.

We don't do Diagnostic Reviews at risk since at the outset we don't know yet whether a turnaround is viable or not.

Directional Diagnostic Review

The Directional Diagnostic Review provides directional rather than absolute answers.  

It is particularly useful when there is insufficient time available for a complete Diagnostic Review e.g. in a crisis situation. 

If it is evident that a turnaround of a distressed company may be viable, such further work will take place during the turnaround plan refinement stage of the turnaround.

Typically, an element e.g. formal leadership assessment may be omitted, the scope and depth of streams of work may be diminished, and/or the financial assessment may exclude financial modeling and debt repayment plans.


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The Diagnostic Review is CRS Turnaround's primary tool for determining short-term survivability and turnaround viability, devising a turnaround plan, and mobilising the organisation around the future turnaround effort.