Stats from the Turnaround Management Assoc.
According to the TMA; Only 20% of distressed businesses recover. You can imagine what that means for the other 80%; they limp along a shadow of their former self or they disappear into another firm or into the bankruptcy process.
That high number goes to one thing – not acting soon enough. A recent client of ours (outside the gift business) waved the white flag while the last few dollars were headed out the door. We went straight from health issues into cardiac arrest. Apparently their previous two internally lead turnaround efforts didn’t work.
33% of all distressed companies are immediately classified as hopeless. Can you imagine that; one day you finally get religion, call in the medics and they leave you for dead after a quick diagnosis.
But we’re human beings and this is natural. Don’t we all at some point in our lives say; “If only I had stopped ___x___ before ___y___ happened to me”.
So what, according to the Turnaround Management Association, are the characteristics of a company that can be saved? They tend to have all of the following four traits;
1. At least one viable core business.
2. The ability to get or generate adequate bridge financing.
3. Adequate employee and managerial talent.
4. An effective turnaround manager.