Case | HBS Case Collection | March 2007 (Revised May 2012)

PRG-Schultz International

by Paul W. Marshall and James Weber

Abstract

PRG-Schultz will run out of cash within a couple of months unless the new CEO can reduce costs and restructure the company's debt. PRG was the dominant market leader in the audit recovery industry. The industry consisted of firms which employed accounting professionals to audit purchasing transactions to discover and collect funds owed to their clients. PRG had historically been profitable, and clients were satisfied with their service. In recent years, however, the industry overall and PRG's sales, had been in decline. This left PRG with a cost base that was no longer sustainable. The CEO must decide where to cut costs and how to convince creditors to give the company the time it needs to turn around. A bankruptcy reorganization is one option open to the company. Describes the audit recovery industry, the company's history, the CEO, the financial problems the company faced, and the first steps taken by the CEO to save the company.

Keywords: History; Organizational Change and Adaptation; Leadership; Restructuring; Cost Management; Insolvency and Bankruptcy; Borrowing and Debt; Accounting Audits; Accounting Industry;

Citation:

Marshall, Paul W., and James Weber. "PRG-Schultz International." Harvard Business School Case 807-126, March 2007. (Revised May 2012.)