Entrepreneurial Management in a Turnaround Environment
Course Number 1630
Senior Lecturer Jim Sharpe
This course is primarily intended for students who at some point in their career see themselves as the president/CEO or turnaround professional leading a troubled enterprise through crisis. Those considering a start-up or search fund purchase early in their career may also find it especially relevant for dealing with unexpected challenges. Additionally, it will be of value to those who expect to interface with troubled enterprises as a consultant, investor or creditor. The case mix will give students exposure to small and large companies; family-owned, private and public companies; and US and international companies.
The focus of this course is the manager as a decision maker and person of action in a Turnaround Environment. This course will present situations where you can analyze potential opportunity in turnaround situations and decide if there is a reasonable chance for the managers in the case to create value. It will also present many situations where you will be challenged to develop a plan of action for the managers that will lead to the creation and realization of value. In short this is a course about action planning and decision-making based on good analysis.
Course Content and Organization
The course will be organized around the life cycle of a Turnaround.
Triage: The first part of the course will address the question of whether or not the company is worth saving. Like a battlefield surgeon the turnaround manager must decide where to spend time. Will this company fail no matter what the manager does? Even if survival is a possibility will the investment of time and resources exceed the value to be created? Some cases in this section will allow the student to prepare detailed financial models to predict cash flows available for the operation of the firms.
Crisis Management: Once the manager is committed to the Turnaround, the first step is to stop the negative cash flow. This will require some quick and decisive management action to stabilize the organization and deal with poor employee morale and to increase the margins and reduce the overhead costs. In these crisis situations, the successful turnaround manager must focus on short-term action plans to make the business healthy.
Stabilizing the Situation: During this phase of the Turnaround the manager must focus on building a stable management team that can lead to growth and future profitability. Having stopped the negative cash flow, it will be possible to address long-term issues such as new product introductions or other long-range projects that may attract additional financing.
Planning the Future: Many of the managers that are attracted to this environment do not see themselves as the managers in a stable environment. However, if there is to be value creation a team that can run the company in the future must be put in place and a strategy and organization developed to offer long-term viability.
This course will be 28 class sessions that will be primarily case oriented with some additional readings and some in-class speakers.
This course will complement Creating Value Through Corporate Restructuring because the focus will be on operations and the role of management in creating greater asset value.