CHOOSING A TURNAROUND
MANAGEMENT FIRM [ top ]
"Our firm understands that certain situations require a turnaround management firm.  While we may know what needs to be done, the fine-tuning of and knowing exactly how and when to take those steps requires individuals who are experienced in those disciplines.  Sometimes our judgments are not necessarily independent.  Another consideration is that we do not have the time to deal with troubled investments; we simply want the calls from the creditors to stop."

Words like this are music to a turnaround management firm's ears, but what startled this writer is that they were spoken by an executive of a private equity firm.  In this writer's experience, and those of many other turnaround professionals, private equity firms have not been very receptive to retaining turnaround consultants.  Turnaround professionals have long asserted that the investment mentality possessed by skilled investment professionals is very different, if not inconsistent, with the mentality of turnaround professionals.  This logic has often been rejected by investment professionals, who frequently project an attitude of, "If we can't fix it, no one can". 

Dual Perspectives of Why and Which Turnaround Firm to Retain

The following discourse is directed to private equity firms from the dual perspectives of

  • the value a turnaround management firm brings to a situation, and
  • the process of choosing a qualified firm.

The writer hesitates to use the term "best" when discussing which firm to choose, for just as there are many surgeons who possess the technical skills to perform a particular operation, the final selection will often depend upon the chemistry developed between the surgeon and patient.

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