Turnaround rescue from insolvency

It’s always five past twelve when an interim manager is called into a company to attempt a turnaround. A turnaround is nothing other than rescuing a company from the threat of insolvency. How can this be achieved?

The term “turnaround” describes how a company recovers from a crisis or poor performance, develops positively, and stabilizes. Turnaround often refers to a far-reaching restructuring that puts the company back on track and ensures long-term economic success. For many companies, a successful turnaround is a question of survival and sustainable competitiveness.

But first, let’s look at how companies can get into crises in the first place. The most common causes are

• Financial chaos: High levels of debt, falling sales, or lack of liquidity.
• Market changes: Decline in demand, entry of new competitors, or technological upheaval.
• Management errors: poor strategic decisions, inefficient operating processes, or mismanagement.
• External shocks: economic crises, pandemics, or political instability.

It is usually a mixture of different causes.

A successful company works like a well-oiled machine. Many screws interlock – if one screw rusts or even falls out, it stutters or comes to a complete standstill.

The tasks of an interim manager in a turnaround are just as complex as a machine. Strategy, cost, and personnel management are required. There is no blueprint.

Turnaround: What do companies need to do?

1. Analysis and crisis recognition:
   Identifying and naming the causes and symptoms is essential. Without a deep understanding of the problems, no effective solution can be developed.
2. Short-term stabilization:
   Initial measures to ensure the company’s survival often include cost-cutting programs, negotiations with creditors, and measures to secure liquidity. In some cases, this may also include the sale of company shares, the closure of unprofitable business units, and the identification of new strategic partners.
3. Strategic realignment:
   Once the company has been stabilized, developing a long-term strategy aimed at sustainability and competitiveness is essential. This may involve repositioning in the market, introducing new products or services, or overhauling the business model.
4. Implementation and monitoring:
   Implementing the new strategy requires clear targets, continuous monitoring, and adjustments to ensure the company stays on track. This requires leadership and strong management commitment to achieve and secure the turnaround.
5. Sustainable stabilization:
   This phase is about consolidating what has been achieved and gearing the company towards long-term growth. This often involves building up reserves, further developing employees and processes, and establishing a corporate culture that focuses on continuous improvement and adaptability.

Practical example: Turnaround of a company

This case study describes the turnaround of a loss-making subsidiary based in Austria. The subsidiary employs around 45 people and generates a turnover of around 7 million euros. I was appointed as interim manager for five months, so I had less than half a year to get the loss-making subsidiary back on track through a turnaround.

“It is often necessary to install a new management team. As an external interim manager, I make the decisions necessary for a turnaround not emotionally, but rationally, yet with a sure instinct.”

Alexander d’Huc

The primary objective was to restructure and reposition the company for a successful future. A careful analysis of the current situation and its causes made it possible to develop a targeted catalog of measures. This focused on reducing costs to relieve the company and the product range. Building on this, further steps were taken to adapt the strategies to current market requirements. This led to a comprehensive company restructuring and enabled a successful turnaround.

Success factors for a turnaround

• Management: A strong and determined management team must act quickly and effectively and think long-term.
• Communication: Transparent communication with all stakeholders—from employees to customers and investors—is essential to gaining support and trust.
• Innovation and adaptability: Companies must be prepared to adapt and develop innovative solutions to take advantage of new opportunities and recover from the crisis.
• Financial discipline: Strict financial control and a smart allocation of resources are crucial to making the turnaround sustainable.

Conclusion: The turnaround is an opportunity!
A turnaround is a complex and demanding process that requires financial rescue measures and a profound change in corporate culture and strategy. However, if implemented successfully, it can save a company from insolvency and lead to new strength and competitiveness.

Therefore, the turnaround is a reaction to crises and an opportunity to emerge stronger from challenges!

Finding new paths together.
Think boldly – dare to change.
Alexander d’Huc