It is well documented that there are fewer and fewer turnaround industry cases and that turnaround consulting firms both large and small are hungry for additional case work. This space has been advocating that turnaround firms use operational consulting to generate incremental revenues and two currently unfolding cases demonstrate how this process works.
The first case involves a turnaround firm that was brought in to be an interim CRO for a division hemorrhaging cash. In the course of the engagement the CRO became aware of a broader company issue on sales and marketing bonus compensation. The CRO saw an opportunity to provide its client with added value advice because of the firms association with MRA and MRA’s specialized sales and marketing advisory. MRA came into the case as a consultant working for the turnaround firm and generated significant incremental hours for the firm and value for the client.
In the second case, a turnaround firm was asked by a PE firm to provide it with financial due diligence on a potential distressed company acquisition. The TM consultant immediately found that the target company had significant top-line related issues and recommended to the PE firm that it do a sales and marketing assessment. The TM firm brought in MRA to do a top-line assessment that in it of itself represented significant incremental billings for the firm. The assessment also provided value to the PE firm which received a plan that confirmed that its target acquisition had objective opportunities to grow.
In both cases, the turnaround management firm also put itself in a position to win longer term, high value implementation work which still may occur.
Given the nature of the current turnaround industry, traditional work-out case loads are likely to continue to decline. Turnaround firms will have to adapt and find new ways to generate revenue just to stay in place. These two cases show just two of many examples of how operational consulting can be one answer to firms that are in need of new revenues.