Turnaround Management Firms: Messy Economy Makes Them Great Job Targets

Turnaround Management Firms:
Messy Economy Makes Them Great Job Targets

In a down economy, many troubled companies turn to turnaround management firms to get them through a crisis.

You can find a job via turnaround management firms in several different roles: as a firm member, as a consultant, or by them placing you as a senior executive in one of the firms that they are turning around.

What is a turnaround management firm? Turnaround management firms (also called crisis management firms or workout firms) are consulting firms that are paid to stabilize companies that can’t make ends meet. In almost all cases, the turnaround firm takes complete control of the management of the company, with one of the firm’s top members becoming the acting CEO. They may also bring in additional firm members to work at the company in other consulting roles, particularly in finance. A high percentage of their client companies are in Chapter 11; most others are trying to stave off a Chapter 11 filing in any way they can. These consultants may work on many turnarounds at once; one turnaround firm partner told me that he was acting CEO at five companies simultaneously.
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Turnarounds are not for the faint of heart. The client companies always have cash problems. They generally are having problems getting anything from their suppliers, who haven't gotten paid since the Dark Ages. Suppliers are triaged, and those deemed least essential are simply ignored and not paid. It goes without saying that there will be staff reductions. One turnaround consultant told me, “The employees at my client companies always say that we can do things more efficiently - we're going to use the copier better, and we’re going to cut down on waste on the production floor. I know that that will never be enough, so my rule is that 50% of the cost reductions have to come in heads - staff size reductions.”

This may not sound that encouraging, but this turmoil creates career opportunities. In most cases, the top executives are not simply eliminated. It's hard for a company to get by without a CEO, CFO, Chief of Operations and Chief Marketing Officer. However, they are frequently replaced during or at the close of the turnaround process. In particular, the CEO and CFO rarely survive a workout.

So you could find your next job by having a partner at a turnaround firm make you the CFO at a company she is turning around. Or, if you are unemployed, she could bring you on as a short-term consultant at one of her gigs. She might like you so much that she makes you a full-time turnaround consultant at her firm.

Turnaround consulting jobs generally require heavy travel, but often don't require that you relocate, as the work is done at the client’s site.

You may notice that turnaround consulting firms frequently have more names on the door than partners. They frequently lose partners and other consultants to client companies, who feel there is a real upside at a particular fixed-up company.

So, if you have nerves of steel, and hopefully, some kind of turnaround experience under your belt, consider contacting turnaround management firms to find your next job.