June 2020 - The IFT

Is Your Board “Turnaround-Ready” Post-Covid? by Phil White

Here, IFT Member, Phil White discusses the importance of becoming ‘turnaround-ready’ post-Covid and the advantages of seeking external expert help.

Do SME (Small/Medium Enterprise) Boards really have a grip on the scale of:

a)      Post-Covid impact on their business?

b)     The scale of turnaround and transformation needed to rebuild  competitiveness post-Covid?

c)      The speed and effectiveness required to find and get the right expert support to get there?

95% of 632 SME Board respondents to a highly enlightening  Directorbank survey in May reported that Covid-19 had affected their business (40% seriously), and 96% said 2020  trading would be difficult throughout 2020. The survey concluded Covid-19 will have a “devastating effect to the prosperity of UK SMEs”.

Furthermore, 45% said they had made, or are likely to make redundancies, and expected to make redundancies,  and 55% of senior management were already on reduced wages. 72% would need to rewrite their business plans.

Yet very surprisingly, only one fifth of the survey respondents plan to seek external expert help.

Remember the definition of insanity  attributed to Einstein of doing the same thing over and over again (with the same people) and expecting different results?

Without outside help to stimulate new ways of addressing the crisis, the vast majority of our UK Boards surveyed could be left exposed and wanting. 80% surveyed are relying on the same top-level management resources, expertise and creativity to  get them through the most challenging economic and business environment in nearly a century.

It seems the vast majority of Boards understand the impact, but may be under-prepared and under-equipped to find the scale, speed and effectiveness of the turnaround and transformation remedy that businesses may well require.

So how can Boards rapidly bridge the gap of understanding and action, and assess the scale of the turnaround and transformation needed?

A quick internal business health-check across all company workstreams is essential to get Board consensus on what is required before going to the right kind of external help which is highly likely to be required.

The Institute For Turnaround (IFT) is an independent body, free at point of access, which can advise on sourcing facilitators and turnaround specialists to help in this exercise and in the turnaround and transformation work to identify and source beyond.

Getting external and independent leverage and expertise to the Board health-check is vital to avoid the “insanity” of applying same methods and thinking even more so in this time of economic crisis and upheaval.

An informed, independent view is essential to avoid subjectivity, provide fresh thinking, identify and breakthroughs needed in turnaround. New eyes and ears provide fresh dispassionate thinking, insight, impetus and energy, can help ask the “stupid” and simple questions, override vested interests and politics, and provide vital specific and technical expertise and experience. Too much knowledge of the business and status quo at this point can often be a dangerous thing.

The Directorbank survey findings point to a huge “action gap” with only 20% of SME businesses expecting to take on external and interim management or consultancy support to solve what at least 95% of respondents see as a significantly adverse impact on their business Post-Covid.

When we see so many of our SME’s not prepared to take sufficient action we are reminded of Theodore Roosevelt’s words, “the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing”.

Assuming that the alarm bell of a potentially very large post-Covid action gap is now firmly ringing across our SME businesses and beyond, we can start to explore the main “go-to” options for where to seek help. I will follow up with a brief discussion paper on this next week.

Phil White MA (Cantab), FCA – pwcltd1@outlook.com

IFT Webinar: Corporate Insolvency and Governance Bill – Key changes and implications for turnaround

The IFT is pleased to announce the IFT Webinar Corporate insolvency and Governance Bill – Key changes and implications for turnaround on Friday 5th June at 8am.

The webinar will be chaired by Richard Obank – Brown Rudnick and will consist of a wider panel of Rob Lewis – PwC, Duncan Parkes independent IFT Fellow and Stuart Tait – Gateley. the panel will be discussing the key points of the bill and the implications the panel believe this bill will have on the turnaround market.

To register for the webcast please follow this link: IFT Webinar: Corporate Insolvency & Governance Bill 

*Please do not sign up using the member sign up below as this will not register for the webinar as it is hosted on an external website.

Outlook for Automotive Retail during and after COVID-19

The IFT is delighted to announce the upcoming ‘Outlook for Automotive Retail during and after COVID-19’ Event to take place via webinar on 3rd June 2020.

The Chairman of ASE Global, Mike Jones, will be discussing the impact of Covid-19 on the UK Automotive industry and what this means for businesses as we work towards coming out of lockdown. Mike will also be covering some other aspects that are likely to effect the automotive industry over the course of the next year.

Mike is one of the industry’s leading experts on dealer profitability and heads up ASE’s work to analyse retail performance across a range of key markets.  Mike speaks regularly at events around the world on the industry landscape and the opportunities and challenges for dealers.  As well as profitability, he is an expert on digital dealership models, and how these are set to disrupt the automotive retail landscape.

Andrew Beckett of Kroll, a division of Duff & Phelps specialising in Risk management, will also be giving an insight into the Cyber issues threatening the sector and the impacts this can have on businesses.
This session will then be concluded by a Q&A session hosted by Paul Smith including both of our previous presenters
To register for this webinar please click here: IFT Webinar: Outlook for Automotive retail during and after COVID-19

*Please do not sign up to the webinar using the member sign up as the webinar is hosted on an external website.

IFT Media Release in response to the Corporate Insolvency and Governance Bill

Institute for Turnaround accredited turnaround professionals ready to deliver business rescue offered in new insolvency legislation

-Legislation provides breathing space to turnaround businesses and avoid unnecessary insolvencies

-New moratorium requires hands-on turnaround skills

-IFT accredited professionals with a successful business turnaround track record are well placed to ensure success

The IFT welcomes the passage of the Corporate Insolvency and Governance Bill, providing a breathing space for struggling but ultimately viable businesses to survive and thrive, during and beyond the unprecedented Covid-19 pandemic.

Steve Swayne, Chair of The Institute for Turnaround said:

The Government has acted decisively to introduce legislation to respond to the immediate business challenges of Covid-19 and embed a longer-term rescue framework to avoid unnecessary insolvencies.

The UK benefits from world leading turnaround practice and our rescue community is well placed to use the new framework to save struggling businesses for the benefit of workers, shareholders, creditors and customers. With the situational leadership, operational management and financial restructuring skills required to transform struggling businesses, IFT accredited professionals look forward to working with businesses to grasp this opportunity for the benefit of the business and people of the UK

The ‘monitor’ in the moratorium process, who must be a licensed insolvency practitioner, will be accountable for providing assurance that the rescue of the company is both achievable and on course. The IFT would urge that the skills of accredited professionals, with a proven record in changing the fortunes of distressed companies, are used in this new process. This includes working alongside management teams to deliver the turnaround objective and providing assurance to stakeholders, including the monitor and creditors, that the turnaround is on track.

During the more benign economic conditions of 2019, we estimate that our members saved in excess of 200,000 jobs and £2bn in enterprise value. The new moratorium provides the opportunity for IFT members to take an active role in supporting struggling businesses to turn around, saving jobs and value for all stakeholders. Our accredited turnaround professionals urge early intervention as the best means of securing success and avoiding unnecessary insolvencies, for the benefit of all stakeholders and UK PLC.

You can read and download our full media release here.

For further press information please contact:
Francesca Rivett-Carnac (francesca@standagency.com / 07966 227 390)
Grace French (grace@standagency.com / 07906 630 501)