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Huron Consulting: Enhanced Governance Tools Improve Turnarounds, Financial Recovery

January 15, 2014, 07:47 AM
Filed Under: Turnaround Management

A successful turnaround requires experienced leadership that can execute well-defined, targeted goals. With such high stakes, proven professionals should be enlisted to support the make-or-break turnaround process. Huron Consulting Group released a briefing entitled, “The Board of Directors as an Agent of Change in Turnarounds”, that details how corporate governance tools can be used to evolve a Board’s role as fiduciaries into active drivers of the company’s financial recovery.

“Standard corporate governance documents are generally sufficient for a stable, growing business, but the uncertain nature of a turnaround necessitates that a Board, in conjunction with key stakeholders, review the company’s original Board charter and bylaws and modify them to suit current and anticipated needs,” said Ray Anderson, managing director, Huron Consulting Group. “The modified governance architecture should be more granular in approach, with a laser-like focus on accomplishing the goals of the turnaround.” 

As detailed in the report, companies should begin by clearly defining their Boards’ enhanced responsibilities. This includes observation rights by capital providers and other stakeholders, enhanced voting rules, and rules related to retention or discharge of specific parties. The report also recommends that a thorough examination of the company’s current Board for the skills and experience necessary in a turnaround, such as expertise in finance, operations, sales, turnaround, and restructuring, should follow. Companies should also weigh the benefits of hiring a Chief Restructuring Officer.

“A CRO’s objectivity and insights can be crucial in managing the operating and financial metrics needed to measure and gauge the progress of a turnaround,” said Hugh Sawyer, managing director, Huron Consulting Group. “A successful turnaround requires experienced leadership that can execute well-defined goals to preserve and enhance enterprise value.”

Huron provides financial advisory, restructuring and turnaround, interim management, valuation, forensic and litigation, and operational improvement consulting services to companies in transition, boards of directors and investors and lenders. The Company also consistently ranks among the Top Crisis Management Firms and has been selected as an Outstanding Turnaround Firm by Turnarounds & Workouts every year for the past ten years.

Click here to view the full briefing.

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