Why you need an interim management service (II)

RESTORING VIABILITY AND PROFITABILITY.

The problem

When we talk about viability , we are referring to the feasibility of carrying out a project or running a business. Non-viability, by contrast, means that this is impossible.

There are many companies we are familiar with that have had to consider or face this situation, for a variety of reasons, such as Kodak, Bankia and Abengoa.

Some of these causes are structural (such as a failure to adapt to new technologies applicable to the sector, regulatory and legislative changes, or the entry of new international players into the market), whilst others are cyclical (due to significant one-off or sustained losses over time, as well as unexpected events, due to competition, a lack of foresight or poor management, etc.).

The effects of such insolvency are wide-ranging and include, amongst others, the inability to meet payment obligations due to a liquidity crisis; the legal grounds for the company’s dissolution, with an obligation to undertake financial restructuring and recover assets; a disproportionate increase in debt, or a pre-insolvency or insolvency situation, which may even lead to the partial or total loss of control of the company, or to a liquidation process with its dire legal consequences.

In all cases, this entails a huge loss in the value of the investment and its returns, as well as damage to the company’s reputation in the market.

For the vast majority of us, as managers or business owners, we can take a proactive approach to (1) prevention, putting the necessary measures in place in good time to avoid crossing that deadline, or, in more desperate cases, to (2) rectification, once the situation has taken hold within the company or business unit, and at the very least, an ugly scar will remain.

The solution

Engaging an interim management service becomes a suitable and optimal solution to the problem at hand, both in terms of prevention and rectification, in cases where the company lacks the managerial capacity to do so, has no prior experience with such processes, or does not wish to use existing staff to avoid ‘burning them out’.

The interim manager is a professional with proven experience in crisis management or turnarounds who, drawing on numerous successful cases of similar assignments, applies the techniques and knowledge acquired, with the primary objective of returning the company to profitability through two approaches:

1. Preventive: using every means to avert, in advance, any risk of business failure; carrying out economic and financial restructuring, strategic planning and its committed implementation; reorganising the staffing structure and operations; and boosting commercial performance; and, if necessary, drawing on the professional networks and contacts built up throughout his career (strategic suppliers, potential clients, sources of capital or investment funds, etc.).
2. Corrective, involving a crisis response plan and action in the face of business uncertainty, with particular emphasis on securing external capital to ensure business continuity until the causes of the viability crisis – which are already having visible and evident effects – have been rectified.

In both cases, interim management proves to be a flexible and effective solution to a problem of enormous significance and impact on the company and the business owner.

Find out more

EPUNTO interim management case studiesAbout the EPUNTO Interim Management service Other situations where an interim management service is the ideal solution

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