What Are Corporate Turnarounds?

Christopher J. Henneforth is co-founder and CFO of Omnia Medical. A CFA (chartered financial analyst) charterholder, Christopher J. Henneforth has taken on numerous positions at over 30 companies in the past decade, including spending time as a turnaround expert.

When a company performs poorly for a period of time, a turnaround is required to return it back to profitability. Turnarounds look at the root causes of the company’s failure. These may include an increase in supply prices, a new competitor, managerial failures, or ignorance of new business trends. Whatever the reason, a turnaround implements long-term programs that address these failures and return the business to its original position in the marketplace. Turnarounds also stabilize the business and ensure that it maintains profitability in the long run.

A type of restructuring process, turnarounds are very hands-on. They take place before a business becomes insolvent, whereas general restructuring is a formal insolvency process. Companies must find short-term financing solutions that cover the cost of turnaround programs, and should possess the resources and skills necessary for the success of the corporate turnaround.