Is the “Slippery Slope” a financial condition?
No! The financials are the thermometer, not the disease itself. The “Slippery Slope” is caused by operating problems.
Will our bank or senior lender alert us to the problem? Rarely! Your bank should not be the provider of the early warning red flag. The bank expects you to be on top of your problems.
Rarely! Your bank should not be the provider of the early warning red flag. The bank expects you to be on top of your problems.
Once we”re on the “Slippery Slope”, will our bank provide turnaround assistance?
Rarely! Because of lender liability laws, banks are prevented from providing direct assistance to troubled businesses. They may recommend a turnaround specialist to work with the top management of the company.
Won”t our “Slippery Slope” problem attenuate or disappear with some cost reduction, or a couple of good sales months?
Rarely! Most managers are optimists about their business and their ability to “weather the storm.” They wear “rose colored glasses” and often fail to recognize the severity of the signs and the difficulty of a turnaround. Another common managerial trait is the “shoot the messenger” syndrome. In this situation, subordinates are afraid to deliver the “bad news” and it stays buried. “Management in denial” is often the single most common barrier to early recognition and handling of a slippery slope crisis.
Once a company is on the “Slippery Slope”, is it possible to get out of the negative spiral?
Yes! While it”s difficult to get off the slope, it is possible. The keys are early warning, getting professional help, objectivity, accurate analysis and positive action.
If we”re considering engaging a turnaround specialist, what credentials should we look for?
Look for consultants who “have been there, done that.” It”s not the degrees that count in turnarounds, it”s the experience. Your turnaround team should be ready, willing and able to work with you 24/7 to analyze the problems, develop the plan, manage the crisis, (stop the hemorrhaging), negotiate the financial restructuring. You”ll need to have 100% trust in your team. And the turnaround team should all be members of the TMA – Turnaround Management Association.
What are the costs in a typical turnaround engagement?
There are three types of fees you can expect to pay: Retainer: One time only upfront fee which insures that you”ve got the team on board. Retainers vary in size based on size and complexity of engagements. Hourly Fees: Generally vary from $150/hour to $500/hour or more for top guns in major engagements. Success Fees: Commissions or bonuses based on refinancing, M&A transactions, etc.
What types of specialists will the turnaround manager utilize?
It depends on the nature and complexity of the engagement? Typically, the “bench” will include CPA”s, attorneys, operating specialists. If there are computer problems, the bench will include one or more IT experts. If the company has sales/marketing problems, you should expect a sales/marketing expert.
What”s BRS”s Business MRIâ„¢ ?
The is an overview provided by BRS. It”s analogous to an annual physical in the medical profession. We examine all facets of the business in a 5-10 day engagement and provide an oral and written report to management on our findings. In many cases, the provides early warning on some key slippery slope problems.
What are the costs of the Business MRIâ„¢?
It is a packaged price based on size and complexity of the engagement.
What type of M&A (merger & acquisitions) transactions are typical in a turnaround?
Sale of under-performing product lines, business units, sale of the entire business, acquisition of businesses that provide improved market share, technology advantages, management strength. Broad range of options.
What are some of the bankruptcy options?
Chapter 11 reorganizations, Prepackaged 11”s, 11/7 liquidations. Broad range of options requiring substantial expertise. In general, bankruptcy situations are undesirable: time-consuming, expensive, defocusing and damaging to the reputation of the business (which may already be fragile). But sometimes the protections offered are the only way out. How many bankruptcies are filed per year? Answer: In the year ending 9/30/02, 1,550,000 bankruptcies were filed and the trend line is upward.
How is a business financed in a bankruptcy situation?
In order to operate during a bankruptcy, a cash collateral agreement with the senior lender is required. Sometimes, the senior lender will provide DIP financing. DIP (debtor-in-possession) financing can be obtained from a variety of sources. DIP financing ranks ahead of all other forms of debt.
What size of business does BRS handle?
BRS focuses on small to midsize businesses, an area often neglected by the larger turnaround/consulting organizations with high overheads.
Who can I contact for additional information?
Telephone: Toll-Free (877) TEAM-BRS (877-832-6277) E-mail: info@teambrs.com
