A German based multi-national, a niche player in the chemicals industry encountered faltering performance in its Australian operations.

Its European CEO was finding it difficult to make a realistic assessment of the issues based on the reports he was receiving, and his observations from his necessarily brief visits to Australia.

EIM was commissioned to assist local and German management in clarifying the core issues, recommending remedial action and if required, to assist in implementing change.

EIM prepared an initial assignment brief in advance of a visit by the European CEO. On his arrival in Australia the brief was fine-tuned with Australian management. Within two weeks EIM provided an Interim Manager. He had international experience in turnaround management and deep experience in the client’s target market segments.

A key factor was the effectiveness of the Australian CEO. EIM was able to bring all parties to this realisation - including the incumbent. The Interim Manager took over the CEO role after having professionally managed the severance and outplacement process for the incumbent. His role then included the recruitment of a permanent CEO, and managing the hand-over. The parent company was able to handle a difficult transition at a distance.

A large US food-processing group decided to rationalise its operations. It particularly wanted to dispose of a French subsidiary which was experiencing serious difficulties.

Although fairly modest in size compared with the group, it was losing money and had endured ongoing managerial and industrial instability. Its Managing Director had just been dismissed and the industrial and commercial environments were very poor.

The group charged EIM with placing a transition manager at the head of the subsidiary, with a view to divesting it as a whole or piecemeal within 12 months.

Before a sale could be contemplated, the performance needed to be turned around.

Regaining control of the business
EIM introduced an Interim Manager with the right profile in less than a fortnight. He was a specialist in corporate turnarounds, with 30 years of experience, and a seasoned negotiator. He faced a double challenge: he first needed to stabilise the company and then move to revitalise it commercially. An early priority was to rebuild a reliable information system to provide a basis for rational decision-making. This was completed in three months.

Rebuilding a shared business plan
Overhaul of the business plan was critical to any proposed improvement in or sale of the business. The planning process proved to be a means of rallying the management around shared data and a common project. The Interim Manager soon achieved a return to dialogue and relative industrial peace.

This made it possible to accelerate the operational changes, which included restructuring pricing, renegotiating with suppliers, remotivating sales staff, introducing quality initiatives and optimising logistics. After six months, sales began to pick up again, warehouses began to function properly and both the market and the management team were gradually reassured. Balance was restored and a new impetus developed. The business plan regained its credibility and the stage was set for an orderly disengagement.

The solution
The sale of some operations and closure of other activities proved to be on balance the best option. The Interim Manager applied himself to the restructuring, consulting staff, implementing redundancy plans and liquidating assets. He orchestrated a complex disengagement plan while ensuring continuity in the operations. The end result was that the group broke a serious deadlock without industrial unrest or loss of key customers. Value was restored to the business. The whole exercise was completed in 13 months.

EIM was engaged to provide an Interim General Manager to save a small engineering services company from administration. The firm had an annual turnover of about $20 million and a profitable history, but a series of unfortunate business decisions had resulted in a cash flow crisis.

The Interim GM immediately renegotiated arrangements with creditors, restructured the business by ceasing interesting but costly projects, centralised financial control and fixed internal business processes. Once the business was stabilised, operating staff were added to profitable business divisions to generate additional sales and the owner was encouraged to focus on developing new business in areas where the company had particular expertise. EIM played a crucial role as interface between the owner and the Interim GM as the hard decisions were made.

After six months, the business was cash flow positive, creditor obligations were being met and by the end of the year the business generated a handsome return on investment. The Interim General Manager was initially asked to stay on to prepare the business for sale over the next 12 months. Such was the improvement in performance that sale plans were ultimately shelved and the business is now in acquisition mode.

Upon executing an MBO of a $200 million p.a. private company with a significant position in its industry, the new owners and their bankers promptly asked EIM to help strengthen the financial function.The business was profitable, but due to its previous private ownership, in-house accounting was limited to the trial balance stage and financial management consisted of a three-month cash flow forecast.

Arriving within a week of the MBO, the EIM Interim CFO immediately prepared detailed sales, production, profitability and cash flow forecasts from scratch to establish a realistic budget and to confirm the business plan projections. Within six weeks, the accounting function was upgraded to produce financial reports for group companies and to present consolidated financial reports to shareholders and bankers.

On the Interim CFO’s recommendation, the business developed and implemented a new costing and reporting system. The Interim Manager delivered this system within six months, but in the meantime developed workable manual systems to provide the necessary performance information. EIM was also able to assist this client with a second specialist Interim Manager who was subsequently recruited for an ongoing role. By moving quickly to apply appropriate expertise, the new owners and their bankers now have reliable and timely financial information.

Within 48 hours of being briefed by the Board of a private company, EIM placed an Interim CEO with the aim of reversing several years of declining performance. A collapse in earnings was threatening the viability of the entire operation which services financial institutions and Federal and State Government Departments and has sales of just over $100 million.

Nothing short of an immediate arrest of cash losses and rapid implementation of a short-term recovery plan would stop the creditors from exercising their security and seeing the company fail. The Interim CEO’s first task was to prevail on the banks to stay their hand while a plan of action was developed.

This done, management was restructured and a number of important changes to personnel took place. As a result the group took on a simpler structure and line managers were made accountable for their individual areas. Unions and the workforce were apprised of the situation Over nine months the Interim CEO stabilized the company’s relationship with its customers, negotiated a refinancing of the company’s debt facilities and gained access to funds to carry out necessary capital investment aimed at substantially improving productivity and reducing costs.

The company’s future is now assured. The stakeholders are looking to grow the business and exit on favourable terms in the next couple of years.