Turnaround situation assessment

Characteristics of turnaround situation assessment

Once the need for a turnaround has been recognised, the first step is to determine short-term survivability, and whether a turnaround will indeed be viable in the medium to longer term. 

The higher the degree of urgency, the less time is available.  Turnaround situation assessment is therefore normally "quick and dirty" and 80/20.   Analysis is high level, broad in scope, and in-depth only with respect to key issues. 

The turnaround strategy tend to be generic in nature, and the turnaround plan on a high level.

Should the outcome be positive, it is normal for more in-depth analysis to be conducted, and for turnaround strategy and plans to be further developed, once turnaround management has started - see the turnaround plan refinement stage.

Turnaround situation assessment can be as short as 2 weeks for a small company, to 8 weeks or longer for a large multi-business groups.

Determining short-term survivability

Short-term cash flow forecast

The first step is forecasting cash flow for a 4 to 8 week horizon reflecting aggressive but realistic working capital requirements that can be achieved employing emergency management actions.

Should no financing be required, turnaround viability is not affected by short-term funding needs.

Should financing be required, a short-term funding survival plan is required.

Short-term funding survival plan

  • What cash can be generated internally by means of asset reduction?
  • What funding gap will this leave and for how long?
  • What need to be funded from external sources?
  • What is the business able and willing to offer e.g. security?

If short-term funding cannot be secured, the turnaround is not viable.

Determining turnaround viability

Once short-term survivability has been proved to be positive, two dimensions are used to determine longer-term turnaround viability:

Please go to our turnaround situation assessment services to see how CRS Turnaround assesses shorter-term survivability and longer-term viability.

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Turnaround viability assessment consists of both a qualitative and a quantitative element.