Business Turnaround 101

Tom Carlson’s Latest Blog Post

tom-carlson-business-turnaroundTom Carlson is a CPA and CIRA that focuses on business turnaround. in this article you will learn the basics of business turnaround and how it can affect companies. It is true that businesses can face troubles that can occur for various reasons but it is important to have all the facts and make rational decisions based on facts and evidence. Problems can occur due to internal issues, the external market, or due solely on cash problems. Below are helpful definitions and key terms to help a business that may be facing some unfortunate circumstances.


Covenant Default:

  • Imminent covenant defaults lead creditor groups to organize and renegotiate terms and conditions of credit agreements

Liquidity and Cash Management:

  • Development of short-term cash forecast
  • Aggressive cash management and cash preservation
  • Liquidity enhancement
  • Working capital assessment
  • Supplier and customer reviews

Liquidity Constraints:

  • Liquidity becomes constrained limiting a company’s ability to operate efficiently


  • Over-leverage and looming debt service payments trigger concern and trepidation from key creditor constituents

Covenant Relief & Negotiations:

  • Evaluation of pro forma debt capacity
  • Restructuring existing debt
  • Recapitalizing per new business plan
  • Raise new debt and equity financing


  • Assess non-core asset disposal and monetization strategies
  • Deal process and marketing coordination
  • Negotiation and execution of LOIs, term sheets, asset purchase agreements and POR
  • Deal financing
  • Post-merger integration

General Economic Weakness:

  • General economic weakness can lead to a deterioration of profitability

Capital Structure Solutions:

  • Evaluation of pro forma debt capacity
  • Restructuring existing debt
  • Recapitalizing per new business plan
  • Raise new debt and equity financing

Operational Inefficiencies:

  • Operational challenges and inefficiencies, combined with a lack of internal controls can lead to a deterioration in performance

Operational Improvements:

  • Efficiency improvement
  • Process streamlining
  • Cost reduction initiatives
  • Organizational effectiveness
  • Supply chain optimization
  • IT modernization

Business Model Challenges:

  • Volatility in raw material and energy prices can cause unforeseen business model challenges and margin compression
  • Failure of a company’s business model to accurately forecast results can lead to credibility issues

Strategic Alternatives & Business Planning:

  • Strategic review of business
  • Corporate turnaround management
  • Development of long-term business plan
  • Execution of turnaround strategy

from Tom Carlson: Restructuring & Turnaround


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