When a company is facing a financial and operational turmoil, causing ever-falling revenue and dwindling cash flow worsening liquidity, intensified supply chain issues and increased employee turnover, it might soon prove to be detrimental for its existence. However, the outcomes could be improved if the issues are quickly confronted by the key constituents and a CRO ( Chief Restructuring Officer) is sought out for help, before it is too late.
This article intends to define the role of a CRO, along with discussing the strategic and tactical benefits that an experienced CRO brings to exterminate crisis situation for your company/dealership!
The CRO’s strategically value and skills:
It is important to recruit a CRO at times of crisis, as they allow creditors and stakeholders to gain trust and confidence and also because they have the experience and knowledge to help stabilize business with their turnaround plan, that would lead to increased value. In addition, they also offer significant advantage of shielding the CEO along with the management team, so that they can concentrate on the essential job of running the business on a daily basis, without stressing out on the reorganisation process.
Strategically, a CRO provides the board and management team with the following:
- Objectivity: This being one of the most critical elements that a CRO brings, enables to develop the trust required to achieve agreement with key stakeholders. As all stakeholders have to reset their economic aspirations to some degree, restructuring becomes controversial by nature. During this process, the gaming between parties for relative gain is constant, thus generating frequent disagreements. An experienced CRO provides the company with an unbiased view of economic options that are available and also the evaluation of these options that sets the stage for a collaborative solution to the issue.
- Accountability and authority: With the priority to focus Organisation’s attention on achieving results, the CRO must have the authority to remove the hindrances that come in the way of company’s success. A CRO equipped with strong financial and operational skills can assess the problem and will be able to come up with the appropriate solutions!
- Flexibility: In order to succeed in dealing with the immediate threats to the company, a CRO must be capable enough to be multitasking, which demands wearing any number of corporate hats when needed.
- Urgency: To accomplish the restructuring objective, the CRO offers a regular sense of urgency. He must understand that, when time is money, pace and sense of urgency are important in a situation that has turned critical. The CRO must ensure that to execute the strategy or plan, proper level of resources are to be established.
The tactical skills of CRO:
The seasoned CRO offers value to the company with tactical skills, that include his or her negotiating and diplomatic skills, invulnerability and tranquillity in times of pressure, along with financial, organisational and management skills to come out victorious with positive results!
In operational areas, the CRO must be instrumental, such as,
When maintaining liquidity: In order to retain creditor support, it is crucial to correctly predict the company’s liquidity needs over the time of transition and to resolve DIP and emergency fund negotiations. Proper preparation and effective implementation of cash needs against other strategy, produces increased chances of turnaround effectiveness.
Maximising the chance for improvement: An experienced CRO rapidly works to discover significant opportunities for improvement in all market segments, as businesses can’t undergo serial restructuring and when change is ongoing, the organisation has to look at all fields that can provide improvement.
Achieving productivity through coordinating and restructuring process: Keeping the external professional staff focused on projects and schedules, drives the process to an effective conclusion. When the company is seeking to refinance its current debts, CRO is always the leading specialist to communicate about the future of the company.
We can summarize by saying that a CRO is a specialist well-versed in the strategic and tactical abilities required to recover a distressed business or help out an underperforming company to return to top performance.
