Foreword

Turnarounds are not for the faint of heart. The hardest aspect of a financial turnaround to convey on paper is the emotional strain on everyone involved. Family breadwinners lose their jobs and worry about their mortgage payments. Financial officers, lawyers, line managers, and others directly involved in the turnaround work 18 hours a day, seven days a week and live from deadline to deadline. Their adrenaline wanes. The company has violated its loan covenants. The bank has given it only until the next meeting--about two weeks—to stop the bleeding, reposition the business, motivate the staff, and develop a plan to deleverage the balance sheet. The company's bankers will not simply agree to relax some of the covenants; they will concede only under pressure in a room full of lawyers with everyone screaming.

When a turnaround team comes into a company and makes changes, it may create resentment, skepticism, and suspicion among employees who feel their stewardship of the business is being condemned. But once the bleeding has stopped and the business has been "fixed," many of those same skeptical employees will have to stay on to ensure the turnaround's success. Companies must therefore convince employees to look at members of a turnaround team as essential elements in a new business direction, not as outsiders.

In short, turnarounds are not simply a matter of tinkering with the company's product development, marketing, or financial strategy. A turnaround is an emotional roller coaster representing a fundamental upheaval. The turnaround team has the fate of the company and its employees in its hands. The knowledge that hundreds, if not thousands, of people's livelihoods depend on its decisions and actions, combined with that most visceral of emotions—the fear of public failure—makes a turnaround one of the most stressful business endeavors imaginable. Although some managers thrive on the pressure and even consider it a career opportunity, others become paralyzed with indecision.

That's why this guide to the turnaround process is so important. It analyzes 20 case-study companies in various industries, explaining how they ran into financial difficulty and how they turned themselves around through financial restructuring, strategic redirection, new marketing strategies, better controls, and other measures. If you're a senior financial executive—and especially if you're the CFO of your company—this is the book to have in your hand when you talk strategy with your CEO—whether the news is good or bad.

Robert Sartor
President, Business Support and Chief Financial Officer
The Forzani Group, Ltd.