Many enterprises worldwide hit a flat patch before they take off and grow again. Revitalisation is our name for describing the process of lifting an entity off its butt and getting back on the upward growth curve with real energy.
The process requires an outsiders look at every aspect of your business. The dumb questions are asked, the assumptions that underpin the current business model are challenged, there is robust debate over the customers needs, wants, personality, preferences and and a great deal more before it is all brought together in a manner that energises all stakeholders.
The Revitalisation Plateau
For many companies flat line or no growth in either their Revenue or Net Profit is the plateau they have settled on. However, constant change is the norm in business and if you are not growing you are in decline. It may feel like business as usual is just fine but disruption strikes when you least expect it. Yesterday’s management direction may become today’s drain on your cashflow, and tomorrow’s crisis.
For companies slow to adapt, or Boards unwilling to make changes in a timely manner, financial viability may be at stake.
When a downturn occurs, a company must divorce itself from the internal strife that nearly always accompanies the lack of performance, and focus on the future. Yet, because there is often no management savior in sight, change comes slowly and often too late.
M3 Group has extensive experience in Revitalising companies sitting on the Plateau.
We have served as interim and long-term senior management in companies/entities ranging from startups to large, privately held enterprises, not-for-profits and Government entities. Our hands-on approach is focused on eliminating the sins of the past and getting the organisation focused on the key issues; growing sales, growing margins and regenerating business value for you in the shortest possible time.
Putting our blend of pragmatism, innovation, discipline and team experience in to your enterprise in a timely manner offers significant advantages:
- You obtain highly experienced management, accustomed to operating under pressure with short time frames and high expectations
- You secure these resources on a flexible basis, often at short notice, for a limited time frame
- You have hands-on, focused and independent management, bringing greater insight into the business issues
- They can be hand picked for relevant industry or situational issues
- We can attract a level of talent that might not otherwise be available to your company
- We help you implement or do it for you
M3 brings extensive, successful hands-on senior management experience, support and advice in Corporate Governance, General Management, Operations, Finance, Technology, Marketing, Sales and Strategy to interim management assignments.
Our people build trust and credibility with all stakeholders, ensuring tangible benefits occurs quickly in all assignments. We can supply hands on support and advice, interim leadership (CEO, CFO, COO, CRO, GM etc.) or longer term management solutions
This broad based experience and the ability to draw on extensive management resources enables us to get beyond the smokescreen that often surrounds companies in need of renewal.
Importantly it allows us to focus on moving the business forward and assisting in the recruitment and integration of a permanent team.
Our expertise is in making the transition work from inside the entity, alongside you and your advisors.
Succession is a game of Options for an Exit strategy
There are in effect six “off-ramps” you can choose from depending on your circumstances. You can;
- Appoint a Family member - If there is one or from several standing in line. This is seldom as straight forward as an owner might like to think.
- Appoint a Caretaker Manager. This allows the business to carry on and provide an income for you until a time in the future when you can sell or wind down.
- Appoint a long-term Professional Manager. This allows you to keep the business as a going concern beyond your passing, generating income for your heirs.
- Wind the Business down. If you think the business would not continue without you, it may be more profitable to wind it down and sell off the assets individually.
- Sell the Business. When a successor cannot be found from within the family or shareholders the most popular option is to sell the business as a going concern. This is a process that best starts early.
- Do nothing. By far and away the most popular option for baby boomers in NZ and Australia at the moment, but ignoring the issue won’t make it go away. Indeed the supply of businesses for sale is set to increase as the large population of baby boomers retire. At the same time demand from the numerically smaller following generations will diminish. The effect could be to make it a buyers market and thus lower prices.
- Good Legal, Tax, Retirement, Investment and Accounting advice from your trusted Advisors.
They need to be involved at the start, indeed it is good if they initiate the process as they may be involved with the business after you have left the building and their guidance can be beneficial to its good health (which you may continue to have a stake in). They will be involved with you and your financial and other business affairs long after the succession process has concluded.
- Start the process early.
The exit decade has arrived. You may be in a race. Over the next 10 years droves of successful baby boom entrepreneurs are looking to retirement, and will want to sell. In order to make your business attractive to a buyer it may take several years of setting it up for an investor to buy in.
With the string of old school directors facing a raft of legal questions the requirement for great Governance has also arrived. If your entity has size you will need to have in place a high performing board. The development of that Governance culture takes time and your enthusiastic encouragement. It also makes your business more attractive, and able to provide you and your buyer with a reduced risk. A buyer with reduced risk is happy to pay a higher price.
- Establish a clear timetable for the process
Those involved will want a clear timetable and need to know what is expected from them. Do not put your anointed successor in a time warp or as it is otherwise known, the Prince of Wales position.
For the next generation to fund a buy-in they will require time to get their affairs in order and the funds in place.
- Keep the Succession plan as open as possible.
Document the succession plan to avoid uncertainty for all parties but keep some wriggle room for yourself.
Your legal and accounting advisors must be involved here so that verbal discussions do not trip up the best laid plans.
Keep family and essential non family members aware of your succession plans.
- Clearly identify your successor
Define clearly your successors role.
Clearly identify who it will be and when they will take over from you.
Deal with the consequences of that decision with those affected by your choices.
- Deal with the (dis)Comfort Zone
Understand that a Succession Plan will take you and your staff, customers, suppliers, and Bankers into an area of significant discomfort. Major change will always do that unless managed well.
Understand that the law of unintended consequences will throw a few spanners at your works, and be prepared to deal with them as they arise.
The Turnaround Waterfall is at a whole new level of decline
During a more serious company crisis, specialised management skills are required to contain, and reverse, a spiraling downward trend.
Companies in crisis need leadership that can quickly identify core capabilities, take advantage of available opportunities, and effectively resize operations to the appropriate level.
Additionally, the failure to meet financial goals, coupled with cash flow and operating disappointments has often created uncertainty with customers, investors, lenders, vendors and employees. M3 has extensive experience in addressing the salient issues, managing expectations, and bringing rapid credibility to the restructuring process.
There are seven essential ingredients to a Turnaround:
- Crisis Stabilisation
- New Leadership
- Stakeholder Management
- Strategic Focus
- Critical Process Improvements
- Organisational Change
- Financial Restructuring
It helps if you can find;
- A competent management team capable of dealing with the crisis and rebuilding the business
- Access to cash, internally or externally, sufficient to fund the turnaround
- A durable competitive advantage, be it a product or process, distribution channel or intellectual property, that will allow the company to be viable in its marketplace long into the future
The key element for a successful turnaround is management capability.
M3 brings the experience to both assess and augment a company’s management capabilities, and provide the guidance for the successful development and implementation of a turnaround plan.
Our focus is on building rapport among all parties involved in the restructuring process, helping to generate one of the most important byproducts of a successful turnaround; a strong management team with a clear sense of direction, purpose and achievement.
Who Initiates the Revitalisation or Turnaround??
It should be the Board, they have all the information, but often it is not
It should be the Accountants, they see the monthly results, but often its not
It should be the banks, its their money at stake, but often its not.
It should be the Lawyer, they are a most trusted advisor, but often its not.
It should be the family of the Leader, they are close and have the most to lose, but often its not
It should be the staff, they know the business inside out, but often its not
It can be the Creditors, who start demanding their money
It can be the IRD or ATO because you are holding other people's tax money in trust for the Government
It should be the Leader who says we have a problem but often Hubris, Ego, Depression, determination, fear of failure, or sheer bloody mindedness get in the way
In our view it will be one or several of the above
It will be someone or a group who cares about the business
But whomsoever it is they must have the balls and the power to initiate action
The Board is best placed to do so and needs to step up and ask the hard questions and reach out for help
This is the ultimate test of a Board member. It is one they need to be prepared for in every company board they sit on. It is what they are paid to do.
Initiate action in a Crisis
In many situations the Board is compromised, possibly captured by a dominant leader, or most often, struggling to come to terms with the gravity of their situation and thus paralysed into inaction
Ultimately someone or a group has to stand up and be held accountable and in law it is the Board.
We have worked with all manner of Boards. From ones that existed on paper alone and had only met once in the previous 10 years to others that lead, inspire, and challenge both themselves and their company to create more value
We can say categorically, our experience has taught us, that one of the best antidotes to corporate failure is a high performing board
Put together a high performing Board and you create a culture of good governance. With that your entity has a far, far, greater chance of durable success than just you and a mate and your accountant.
Professional Boards are becoming more common, with members who have trained to be Directors coming from far more diverse backgrounds than the usual Legal and Accounting route to the Board table. We are seeing more capable senior executives with rounded general management exposure choosing to put that hard won experience to good use after they have concluded their time as CEO
There is no such thing as a Golden bullet in this world but a great Board comes very close.
We have all acted as Directors and are plugged into the world of good Directors and great Governance. We can assist in ensuring that your entity finds Directors that are focussed on creating value for your business and it therefore gets the best Governance possible.