Alternatives to turnaround

Options open to the distressed company other than turnaround

Not all distressed companies can be turned around. 

If there is no market or if the company does not have a potentially competitive product or service, turnaround viability can often be rejected on a qualitative basis (see qualitative turnaround viability assessment) even before running the numbers.

Candidates for quick-fix-and-disposal, disposal or liquidation are:

  • Companies with unexciting prospects;
  • Those that will survive for a limited time only; and
  • The no-hopers.

 

Not embarking on a turnaround when a turnaround is in fact feasible, is a Type 1 error in statistical terms.  This is what new business rescue legislation is meant to prevent.

However, attempting a turnaround when it is not feasible, represents a Type 2 error.   A Type 2 error can be prevented by not attempting turnaround management with distressed companies that are nohopers or those with short-term survival possibilities only.

Options for the distressed company

 

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Alternative to turnaround are disposal after a quick fix, disposal or liquidation..