Corporate Renewal & Turnaround Services

When your business is faced with performance challenges and the environment is uncertain, Baker Tilly’s turnaround professionals offer the experience, skills and insights necessary to be a guiding force in your turnaround and corporate renewal.

Prior to March 2020, the U.S. economy was experiencing the longest economic expansion in history. A period that culminated into peak earnings and peak leverage. All the hallmarks were in place: significant M&A activity, recapitalizations, IPOs, new start-ups and general growth investments. Business plans and capital structures were set for continued growth. However, the economic landscape has shifted notably since then. Elevated interest rates have persisted longer than many companies anticipated, while labor shortages and inflationary pressures continue to impact operational costs. Many businesses are grappling with over-leveraged structures that struggle to cope with ongoing interest expenses and rising costs. These evolving challenges underscore the need for strategic corporate renewal and turnaround solutions to navigate the complexities of today’s business environment.

Along with figuring out how to keep their employees and customers safe, otherwise successful businesses are now confronted by:

Liquidity challenges
Inability to forecast
Debt Covenant violations
Management turnover
Misaligned or bloated cost structures
Financial reporting challenges

Companies could also be facing distress due to labor shortages, strikes, natural disasters, seasonal fluctuations, market saturation, incorrect financial forecasting, high development expenses, obsolete portfolios, insufficient investments, or deficient quality or management control.

Turnaround life cycle

Without a clear plan, quick action and internal skills to meet the above challenges, businesses could experience significant losses, destruction of equity value or complete liquidation.

Below are the business stages that lead to the need for turnaround and stabilization.

Turnaround life cycle

Corporate renewal fundamentals

Like any significant and complex problem, it is best to break the issues down into discrete tasks and focuses. One of the most important elements of a successful turnaround is speed. The quick development of a plan, executed vigorously, is always preferable over waiting for the perfect plan. Our renewal services are grouped into four stages: 1) 13-week cash flow analysis, 2) assess team, 3) draft a plan, and 4) assist with plan implementation as well as financing referrals, if necessary.

13-week cash flow analysis – This analysis and tool is at the heart of any turnaround plan. Start assembling this analysis immediately.

Assess team – Assess whether the organization has the right internal skill sets to execute and augment where necessary. Consider the need to bring in outside resources (e.g., crisis manager, interim CFO, financial resources, turnaround specialists).

Drafting a plan – Formulate a plan and write it down. The document will serve multiple purposes and support discussions with boards, lenders, investors and management. Consider what can be fixed, sold or requires closure, along with what operational or staff changes need to be made quickly. Develop appropriate forecasts to accompany the plan.

Financing referrals – Most turnarounds require either additional financing or modifications to existing terms. The 13-week analysis, turnaround plan, financial forecasts and sources and uses are the key documents required to support a financing request that can be appropriately underwritten.