Reviving Real Reconstruction Skills
Next month the TMA Europe Annual European Conference will take place on the 9th and 10th of June in Madrid. The theme of this year’s conference is ‘Recover, Reconstruct, Reimagine’. Last month we published an article on the theme of ‘recover’ and this month we delve into the theme of ‘reconstruct’ and the business, economic and political environment in which Certified Turnaround Professionals are currently operating.
The Need for Reconstruction
Throughout Europe businesses are struggling. Some are struggling with the impact of the war in Ukraine, some are still struggling with the effects of the Covid pandemic, and some are struggling with changing attitudes affecting how people want to work and to live.
To avoid insolvency, many of these businesses may be considering corporate reconstruction. During reconstruction, restructuring is just one of the tools Turnaround Professionals use to help companies in distress. But the method used and how much reconstruction is needed depends on the issues the company is facing as culture, purpose and thought leadership may also need to be factored in.
One such issue, and one that many companies are currently dealing with, is that of poor performance. Rolls-Royce, for example, has been undergoing a restructuring for several years in order to combat poor performance and shore up its balance sheet. It’s doing this by cutting overheads, reducing expenditure, laying-off staff and improving overall efficiency.
As in the case of Rolls-Royce, a total corporate reconstruction can take years to be fully complete and requires a range of skills uniquely held by turnaround professionals.
During a reconstruction, a turnaround professional will carry out a thorough review of every aspect of the business, its products, processes, cash flow, business plan and overheads to identify those parts that are healthy and those that are draining cash or depressing profits. They will make recommendations on what needs to change, including products, services or staff that need to go, as well as those that have potential to grow and lead the process from implementation to measurable outcomes.
And while some of the actions that need to be taken are painful, particularly where layoffs are involved, it is in the interests of the business to be open to both advisory and hands-on expert advice that will ensure its survival and prevent it from collapsing. This, in itself, can be difficult for business leaders who might not realise the need to let go of products, services and staff they have spent years developing. That’s why independent, objective turnaround professionals are invaluable, along with the expertise and experience they bring to the appointment.
Real Reconstruction is a Specialist Skill
Unfortunately, for some time now the real reconstruction skills required for holistic, effective restructurings have been underutilised, with companies instead opting to do limited restructure of their balance sheets or refinance their borrowings. EACTP Board Member Dr Volker Beissenhirtz CTP shares his opinion on how this attitude has limited the turnaround industry and what the EACTP is doing to aid its revival:
“The European “theatre” will – due to the war in Ukraine, the still ongoing repercussions of Covid and a surge in inflation not observed in 40 years – see a growing number of companies in distress in the very near future.
Not only will this mark the end of an era of few corporate failures, but due to the foreseeable end of “easy money” it will also end the “extend and pretend” or “refinancing” recipes seen as common “restructuring tools” since the Great Financial Crisis.
The ability to drive real restructuring of businesses on the operational and strategic level – including adapting or even completely re-inventing the business model in order to adapt to the needs of the digital age – will (again) become the badge of real turnaround professionals.
Regrettably, after years of poor turnaround business and the resulting loss of qualified turnaround practitioners these qualities are now hard to come by.
The aim of the EACTP is to fill this gap with a growing community of like-minded and highly-trained CTAs and CTPs who are on the same page regarding language, skill-set and level of experience to save value in what is probably the greatest crisis in more than a century.”
In order to give aspiring turnaround professionals a glimpse into how the EACTP’s education program can help to achieve this goal, the EACTP’s Panel Session at the Annual European will see experienced CTPs share their personal stories and explain which of the tools from the EACTP’s toolbox helped them to turn around companies in distress.
The panel, which will be made up of Dr Alberto Cerini, Vlad Nastase, Dr Volker Beissenhirtz and Boudewijn Wellink will take place at 11:45 on Friday 10th June and we hope to see many members there.
Join the EACTP at TMA Europe`s Annual European Conference in June
The EACTP is a partner with TMA Europe and as an event sponsor of the Annual European we will be there to participate in discussions, share expertise and updates and facilitate networking opportunities for our members.
EACTP members can benefit from a generously discounted ticket rate and we hope to see you there.
Find out more about the conference and register here.
About the EACTP
The focus of the European Association of Certified Turnaround Professionals (EACTP) is to educate, train and certify turnaround professionals and for the CTP qualification to be recognised as an industry-standard ‘kitemark’ of quality in the practice of turnaround and restructuring.
It aims to promote turnaround ahead of insolvency, thus saving more jobs and value in the public and national interest.
The EACTP promotes the benefits of turnaround ahead of insolvency through engagement with shareholders, company directors, business management organisations, creditor groups and governments.
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