For Generation X, born between the mid 60’s and late 70’s, blessed with the illusion of everlasting growth, and the succeeding Millennials, spoiled by the amenities of the modern information society, COVID was a hard stop from full throttle.

When talking about startups, thoughts are with the young Bill Gates, smiling at a police camera after being fined for speeding with his new Porsche, or Harvard drop out Mark Zuckerberg, both starting their empires in their early twens. Yet, this is a myth. Today, it is the Generation X, at the helm of startups.

Flying on Sight — Leadership under heavy cash contraints
Flying on Sight — Leadership under heavy cash contraints

Cash constraints and scarce liquidity are notorious in Distress and Turnaround situations and often characterize situations of rapid change for many companies. Maneuvering under these conditions is often a question of discipline and applying the right tools in a timely manner. Challenges are faced on many levels of the organization, but ultimately it comes down to the simple question: Is the firm able to pay for its most critical liabilities?!

The answer to this is digital. If the answer is “yes”, the management has more time, to restructure and revitalize the business, if “no”, the firm is most likely to…

fence separating two territories — post-covid workplace scenario
fence separating two territories — post-covid workplace scenario

COVID-19 has catapulted us to collaboration 2.0.

The black swan event of a global pandemic has disrupted the work environment. The urge to adapt is inevitably forced from the outside on companies, creating a situation of rapid change, where the dynamic of the transformation keeps accelerating. Companies are struggling to retain their operational integrity shaping the post-COVID workplace scenario.

Remote working has become the new reality. Whereas scholars are analyzing the effects on productivity, social dynamics, emotional side effects, corporations are already engaging in their own, economic assessments. The Corona crisis has forced us, to let go of our legacy…

Soldier tired after battle — Corporate Turnaround, choose your battles wisely
Soldier tired after battle — Corporate Turnaround, choose your battles wisely

High emotional engagement of the executive management can flaw the assessment of the situation of the firm and the decision, to discontinue an ineffective strategy. Yet, the lack of adaptability has been identified as a major reason for bankruptcy. This is intuitive, understanding, executives are maneuvering through vast uncertainties every day. They cannot always build decisions on data, but often rely only on a vision and their professional experience, hence, intuition. It is not disrespectful, to challenge the intuitive decisions of the current management if a company is in turmoil. …

Bankruptcy, an avalanche in slow motion
Bankruptcy, an avalanche in slow motion

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

“What brought it on?”

“Friends,” said Mike. “I had a lot of friends. False friends. Then I had creditors, too. Probably had more creditors than anybody in England.”

Ernest Hemingway, The Sun Also Rises

Entrepreneurs and executives with experience in distress situations will truly understand the truth and depth of Ernest Hemingway’s words in 1926. Almost a century ago, He captured the nature of a bankruptcy process on different levels. …

A tsunami of debt — how to survive the coronavirus crisis
A tsunami of debt — how to survive the coronavirus crisis

Bankruptcy rates are closely linked to GDP volatility. In OECD countries the regular insolvency rate is around 8%. Though dramatic for the individual firms, this is a healthy process for the economy, as part of economic Darwinism, selecting the weakest market participants. Companies, failing to adapt to changing market conditions as a result of inertia, are eliminated, opportunities are opened for new ventures. The ratio of defaulting firms can change significantly with a decrease in GDP. In these moments, “not-so-fit-companies” are more likely to face turmoil and distress, once, conditions get harsher and the benchmark for survival is raised. …

Coronavirus und die Wirtschaft
Coronavirus und die Wirtschaft

COVID-19 ist schnell von einer weit entfernten Tragödie zu einer Bedrohung für die Existenz vieler Unternehmen geworden. Durch die Globalisierung, integrierte (Lieferketten-)Prozesse, erhöhte Mobilität auf professioneller Ebene sowie im Tourismus hat sich die heutige Wirtschaft zu einem hochkomplexen, störungsanfälligen System entwickelt.

Auf denselben Kanälen, auf denen Waren und Dienstleistungen von ihren fernöstlichen Produktionsstätten versandt werden, ist das Virus in die globalen Märkte vorgedrungen. Unsere Gesundheitssysteme waren nicht auf eine solche Pandemie vorbereitet.

Die Kapitalmärkte sind ebenso empfindlich. Durch die Verbreitung des Coronavirus in den USA, hat die US-Wirtschaft an den Kapitalmärkten 3,18 Billionen Dollar verloren. Dies ist der gravierendste Rückgang…

Coronavirus und die Wirtschaft
Coronavirus und die Wirtschaft

COVID-19 has quickly evolved from a far-away tragedy, to what is now also a large economic threat to businesses all around the world. Due to globalization, supply-chain processes, and increased mobility for professional and recreational purposes, today’s economy has evolved into a complex system that is highly sensitive to disruption.

On the same channels goods and services travel from their far-east production plants, the virus has now entered developing countries and mature markets. It’s also becoming clear that many health care systems were not prepared to manage a pandemic of this magnitude and are now exceeding their capabilities.

Capital markets…

Steve Tobak from CBS MoneyWatch identifies three phases for a turnaround, whereas the most important initial starting point of the turnaround process is forgotten.

When on-boarded, stopping the firm’s downward trend is critical and the core objective of the turnaround CEO. This aims for multiple stakeholders, including investors, employees, customers and suppliers; it is for the top executive of the firm, to perform. This cannot be handed over to consultants or other executives (CRO, Strategy etc.).

1.) 4 weeks — stopping the downward spiral.

Initially, the core objective of a turnaround executive is, to stop the downward spiral, the company may be in. This falls into two areas:

Creating financial stability

It is fair to say, turnaround specialists, are often on-boarded in the very last moment of distress situations. For firms, this can be dramatic, as the onboarding of a turnaround professional increases chances for going concern from (only) 12.5% to more than 90%.

Reasons are linked to the degree of the ability of an organization to reflect its own status and true performance.

The most striking elements include:

  • Transparency (and accessibility) of KPIs and performance.
  • Governance and distribution of decision rights to the management team.
  • Culture to discuss and challenge KPIs in the management team.
  • Review and challenging of the…

Kolja A. Rafferty

Advisor, turnaround & transformation expert, with a strong bias towards strategy & corporate finance. Specialized in distress situations, Value Design, M&A.

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