Corporate Turnaround

Slatter and Lovett, both turnaround practitioners and academics, wrote a practical text on managing companies in serious financial difficulty. It is organised around diagnosis, stabilisation and recovery.

The diagnostic section catalogues causes of decline from their case research: poor management, inadequate financial control, competitive weakness, high cost structure, failed acquisitions, overtrading meaning growth beyond the capacity of the balance sheet, big projects that go wrong, and financial policy including excessive debt. They argue that decline is nearly always multi-causal and that the visible trigger is usually not the underlying cause.

The stabilisation section is the operational core. The immediate priority is cash, not profit: establish daily cash reporting, take control of payments, stretch creditors deliberately and with communication, collect receivables, reduce inventory, and suspend capital expenditure. They argue that a new chief executive is required in most cases because existing management cannot make the necessary reversals credibly, and that the first two weeks determine whether the company survives.

The recovery section sets out what they call the ingredients of turnaround: new leadership, stakeholder management including banks, suppliers, customers and employees, strategic focus meaning withdrawal from businesses that cannot be fixed, organisational change, cost reduction, improved financial control, and the growth phase only after the others are complete. They give particular attention to managing the bank relationship, arguing that credibility with lenders is bought through delivering on small forecasts rather than through presenting a plan.

The book is written for practitioners and is prescriptive rather than analytical. The evidence is the authors' case experience and consulting research rather than systematic study, so the causal claims about what produces recovery are not established. It is also British in orientation, so the insolvency law and banking practice described differ from the American framework. The operational content on cash management and stakeholder handling transfers regardless.