The document outlines four initial objectives a company can pursue when undergoing a turnaround: 1) improve profitability and grow long-term, 2) improve profitability and prepare for sale, 3) improve profitability but remain the same size, or 4) begin liquidating after stabilization. It then provides details on the specific actions needed to achieve each objective, such as emphasizing core competencies for long-term growth or maximizing short-term profits for sale. Finally, it notes that turnarounds require a clear roadmap and these objectives provide an essential first step.

1. Jon R. Katz, Esq., MBA, JonRKatz@Gmail.com, http://JonRKatz.com, www.linkedin.com/in/JonRKatz
Initial Assessment of a Corporate Turnaround
With astonishing frequency, troubled companies that turn to restructuring or reorganization efforts do so
far later than they should. But “late” does not necessarily mean “too late”. A focused and diligent
turnaround is still within reach, but, in order to get there, the first step is for management to identify
which one of the four following objectives it intends to pursue:
1) Improve profitability and grow the current company long-term
2) Improve profitability and prepare the company for sale
3) Improve profitability and keep the company the same size
4) Begin liquidating the company after stabilization
Improve Profitability and Grow the Current Company Long-Term
This traditional goal requires a plan that emphasizes four points:
A) Improve the balance sheet, including possible equity and lending to support future growth
B) Identify and enhance the core competencies of the company
C) Search for a bank to develop a long-term relationship with
D) Source long-term investments to ensure continued growth
Improve Profitability and Prepare the Company for Sale
The intent here is to achieve the highest-possible earnings before interest, taxes, depreciation and
amortization (EBITDA), as most companies are valued based on a multiple of this number. To do this,
four actions are required:
A) Maximize profit through various short-term means, including rationalizing personnel, cutting costs,
and renegotiating all external factors, such as rents and loans
B) Investing only in capital projects that will yield results in the short-term
C) Openly communicate with lenders to elicit their cooperation
D) Retain an investment banking firm to help prepare the company for eventual sale
Improve Profitability and Keep the Company the Same Size
This is prevalent when a principal is intent on maintaining his or her lifestyle and is not focused on
growing the company. The point here is to maximize the return to shareholders. The four needs are:
A) Maximize profit and cash flow
B) Find a low-risk market-volume plan
C) Find and invest in high-yield, low-risk capital projects
D) Retain key personnel through long-term incentives

2. Jon R. Katz, Esq., MBA, JonRKatz@Gmail.com, http://JonRKatz.com, www.linkedin.com/in/JonRKatz
Begin Liquidating the Company after Stabilization
The only objective here is to maximize asset value.
A) Minimize labor and other costs
B) Collect accounts receivable
C) Dispose of assets, such as inventory, property and equipment
D) Sell intellectual property
Turnarounds are a lengthy and thorough process with various steps along the way. But it is critical to
have a clear roadmap before undertaking the project. The preceding is an essential – albeit basic – guide
to those first steps.