Companies end up in financial distress for a variety of reasons and in different degrees of severity, ranging from ‘plain loss’ of shareholder value to liquidity crisis and (eventually) bankruptcy. Management and/or turnaround professionals – at any point along the path of decline – try to avoid further deterioration of financial distress and subsequently regenerate value for old and new stakeholders by turning the business around and restoring its cash-generating capacity.
The course uses a web-based simulation that will take you through the various stages of a turnaround process (of a car manufacturer). The simulation is designed to enhance your understanding of the connection between financial and operational processes, and the trade-offs between short-term survival and long-term recovery. Even if you will never end up in a turnaround situation, this course will substantially increase your understanding of how companies work and how to manage cash.
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How you will benefit
Being able to sail a ship through a storm makes you a better captain, even in calm waters. So, even if you never end up in a turnaround situation, you will benefit from the insights of this course and will be better equipped to optimize your business.
You will learn to:
- Diagnose causes of decline | Learn which actions and circumstances bring companies into decline; how they can be foreseen or prevented.
- Assess turnaround situations | Evaluate how critical the situation is and estimate how much time is left to execute a turnaround.
- Develop solutions | Define short-term actions for survival while working on a long-term recovery plan. Create a turnaround plan by relating financial restructuring to operational restructuring.
As part of your learning material, you will receive lecture notes on topics such as ‘negotiating with stakeholders’, ‘pre-assignment due diligence’ and ‘short-term cash flow forecasting’, as well as a comprehensive summary.
|Day 1||09:00 – 18:00|
|Day 2||09:00 – 18:00|
|Day 3||09:00 – 18:00|
|Day 4||09:00 – 18:00|
We will use the Saab Simulation Game, as the core of this course. To complement the simulation, we will discuss cases focusing on specific turnaround skills and situations. Saab – an iconic car manufacturer- was acquired by Spyker in February 2010 and filed for bankruptcy in December 2011. Over six rounds, your team steps in the shoes of the Saab management and will try to guide the company through the challenging and turbulent waters in the months that follow. Be aware, although the starting point is based on actual numbers and documents, the events that unfold during the simulation are not (exactly) what happened to Saab. The objective for the student teams, obviously, is to not default but to turn the company around.
The simulation is web-based and needs to be played as a team. In each round you will receive new information and need to make (increasingly complex) operational and financial decisions. The aim of the simulation is to practice your turnaround skills and to enhance your understanding of operational and financial turnaround management. During the simulation you will learn to make trade-offs between short-term survival and longer-term recovery plus balance operational and financial decisions in a turnaround situation.
Day 1 | Morning session
The morning session will introduce you to turnaround frameworks and some general principles when dealing with companies in distress. We will use several mini-cases to discuss the differences between various turnaround situations, enhance particular turnaround skills and perform stakeholder analyses. We will give you some pointers on short-term cash flow modelling. The morning session ends with an introduction to the Saab Simulation.
Day 1 | Afternoon session
You will convene with your team and prepare to start the simulation. At this stage you should have a clear understanding of the operational processes of Saab and be able to make a (simple) financial model to predict your future cash flows – the necessary background information can be found in your pre-reading & SAAB manual.
Day 2 | Morning session
We will start the Saab Simulation. You will have the morning to play Rounds 1 and 2.
Day 2 | Afternoon session
The afternoon session will focus on determining stakeholders’ positions in a turnaround. We will use the Brouwer Group case as an illustration. The Brouwer Group was a large printing group that was taken over just before bankruptcy. A detailed stakeholders’ analysis was essential for the turnaround plan.
Day 3 | Morning session
This morning you will play Rounds 3 and 4 of the Saab simulation.
Day 3 | Afternoon session
In the afternoon, we will focus on buying and selling distressed assets. We will use a real-life case spanning 10 years, with multiple valuation moments and changes of ownership.
Day 4 | Morning session
You will play the final two rounds of the Saab Simulation.
Day 4 | Afternoon session
You will have time to prepare a presentation for the Saab Board explaining your strategy, your actions taken (per round) and your lessons learned. We will ask three teams to present, after which the results will be shown (and a ‘winner’ announced). The course will end with a summary of the lessons learned.
The Managing Corporate Turnarounds program is developed for both financial and operational executives who want to better diagnose and assess turnaround situations in order to define short-term actions for survival while working on a long-term recovery plan. This program is especially beneficial to:
- General managers with P&L responsibility
- Finance managers wanting to understand operational processes
- Professional advisors, e.g. consultants or accountants