- Posted by jbehrendt on October 14, 2009
These weeks are very tiring, and, looking back to the summer, I am quite angry with myself to have shifted some work already known to the last minute, instead of using the quiet summer times, when everybody was in holidays, for preparations. This week I will give a presentation on "Restructuring for Strategic Growth" for ITKIB, the Turkish association of textile-exporting countries, and another one with a similar subject for TABA, the Turkish-American Business Association. Initially I thought that a small modification of my spring presentation "Restructuring in Recession" will do it, but as usual that was too superficial. The focus of restructing in recession is on cash preservation, developing business models for survival, and checking options mainly for downsizing and costcutting, whereas restructuring for strategic growth - based on the idea that the world recession has hit bottom, and that most companies that are still in the market have already overcome their liquidity and financing shortcuts - deals heavily with strategic analysis and strategic choice, supported by activities that help to focus the company operations on the chosen strategy. Interestingly, after preparations, the presentation had the same size (around 60 slides) - but only four or five of them were identical with the recession-oriented presentation. And prepaing the remaining 55 slides was a very hard and time-consuming activity that took more than one week - in the end, the slides are just the output, the hard part is defining what to tell, to bring this into a meaningful order, and to present a logical and stringent order of thoughts that convinces both knowledgeable and less knowledgeable seminar participants.
To switch perspective, I just need to turn to the other side of my desk, on which some piles of paper remind me of the third big presentation I have to give this week. A restructuring analysis for a Turkish firm is just coming to an end, and we will present our findings first to the management of the company, and afterwards, together with the management, to the shareholders. The company is not in good shape, struggling to survive, and managing their cash on a daily basis. The critical question is how much additional equity, and how much more cash is needed, to ensure that the company can survive for longer - and of course to prove that the underlying business model, after doing some restructuring, is valid and can create revenues exceeding the cost even if sales remain suppressed for some time. Our responsibility as a management consulting firm is very high, and it exceeds by far what is needed for a simple controlling or accounting-related project. We have to make up our mind if it is possible to save the company, and if yes, we have to convince its shareholders. If we overestimate the company's capabilities to survive, shareholders (and most of them are private shareholders, not companies) will put significant amounts of additional equity into the company, only to hear a couple of months later that it did not work, and that they have lost their additional money as well. If we underestimate it, and shareholders decide not to support the company any longer, it does not only mean the loss of equity for the shareholders - and sometimes additional private money due to the usage of private real estate assets as collaterals for company loans - but the loss of their workplace for nearly 100 employees. Questions like this, in my opinion, separate the "good" management consultants from the "bad" ones - a "bad" one will revert to his consulting role, will only prepare the facts, leave the decisions to the decisionmakers, and take care that he is not expressing any "personal" opinion about survival probabilities for the company. This, in my opinion, is not sufficient, since it is not possible even for experienced and knowledgeable management consultants to find out every relevant fact in such a short analysis period, therefore requiring additional qualitative judgement, and since shareholders simply expect the expert to express his honest opinion, of course based on the facts he have found out, but supported by his qualified opinion based on years of experience. I just can hope that, in this case, my initial impression that the company can survive with certain modifications, and that it makes sense for the shareholders to inject some more money, is still justified after I have reviewed the comprehensive documentation my team prepared, and, if yes, that I can convince the shareholders of the company as well.
To be frank, there is a third part of my desk, currently filled with textbooks about accounting and finance, waiting to be read and to be converted into meaningful materials for two two-day seminars I have to give in November. But this is another story - keep on reading.
