In a year marked by heightened geopolitical tensions, the AlixPartners 2025 Turnaround and Transformation Survey reveals that companies already experiencing financial or operational duress are bearing the brunt of the disruption. 

The survey shows an economic landscape fraught with challenges. Our comprehensive poll of industry experts dives into the sectors most likely to face distress, the factors driving economic turbulence and the trends shaping the future with potential for opportunity. The survey, now in its 20th year, includes our recommendations to tackle these challenges.

Key Insights:

• Industries most affected by tariffs--automotive, retail, manufacturing--also top the list of those expected to face distress in 2025.
• More than 70% of global restructuring executives expect economic growth to decline in the coming year.
• A large majority (70%) forecast the number of out-of-court restructurings will increase over the next 12 months.
• Rapid advances in AI technology are viewed overwhelmingly as an opportunity by more than 70% of respondents demonstrating the significant role of AI in restructuring.

Geopolitical Disruption

Strained trade relations and global conflicts, compounded by regulatory and legislative changes, will directly lead to corporate distress, according to 96% of survey respondents. More than a dozen countries have changed governments over the past year. Restructuring executives say geopolitical disruptions are the primary factor driving corporate distress now and over the next 12-24 months. This finding is supported by the view of nearly 80% of respondents that global supply chain disruption will increase in the next 12 months.

Economic Headwinds Intensify

The prevailing view of turnaround leaders is continued economic uncertainty underscored by shaky consumer confidence will drive future corporate distress. More than 70% of the 371 respondents expect a decline in global economic growth over the next 12 months. That jumps to 80% of U.S. respondents, while a little over 60% of EMEA restructuring executives anticipate a decline in growth. Notably, three-quarters of all respondents expect a recession in their own region within the next two years, influenced by geopolitical tensions and tariff implications. Furthermore, the majority (65%) expect inflation to increase this year across the regions, likely a sign that restructuring experts expect tariffs will continue to pressure economic growth. A large majority (75%) expect company workforce size to decrease, indicating widespread anticipation of job cuts or downsizing. In a word, the challenge faced by companies is uncertainty.

Automotive, retail, and manufacturing expected to be most distressed

Industries already grappling with supply chain instability, margin pressure, and structural change—manufacturing, retail, energy, and logistics—are now being forced into survival mode. The automotive industry emerges as the most vulnerable sector globally, with 66% of respondents indicating it will be the industry most likely to face significant distress in 2025. This rises to more than 80% in EMEA. Worldwide, autos are followed by retail (44%) and manufacturing (31%). 

Tight credit markets remain a headwind

Expectations of credit tightening are rising again this year after easing in our 2024 survey, reflecting renewed concern about higher inflation. Companies facing turnaround or transition are primarily challenged by sufficient liquidity/capital, according to nearly 70% of survey respondents. This is followed by debt management and cost reductions. Two thirds of survey respondents say the cost of capital for buyers and borrowers will increase this year, hinting at potential expectations for interest rate rises. 

93% of turnaround execs said kicking the can without a plan is not sustainable

A large majority (70%) believe the number of out-of-court restructurings will increase over the next 12 months from the timing of the survey (March 27-April 13, 2024). Yet the survey warns that workouts without a clear recovery path could lead to bigger issues down the road.  Industry sentiment is clear: amend & extend and liability management exercises (LMEs) are seen as stopgap measures, not sustainable solutions. Virtually all survey respondents agree that LMEs are temporary, and a large majority believe they do not ultimately fix the underlying operational problems. There's industry consensus that distressed companies that extended their liquidity runway through amend & extend approaches or raising additional capital in 2024 and 2025 will end up distressed again within three years. 

Glimmers of optimism with AI

AI is increasingly viewed as a strategic lever for distressed businesses. Embracing AI is now seen not only as valuable but as potentially critical to survival and recovery. This optimism underscores the potential for AI to drive innovation and efficiency in distressed businesses. More than 70% of restructuring leaders say the rapid advances in AI technology should be viewed by a distressed business as an opportunity, up from 62% last year.

Jim Mesterharm, Global Co-Lead of Turnaround & Restructuring Services, commented: “Geopolitical disruption has firmly moved to the top of the boardroom agenda. Agility, once again, must become a core operating principle. CEOs and boards need to move fast to strengthen their organizations’ ability to absorb external shocks, pivot at speed as economic conditions evolve, and make the right decisions.”

Eric Koza, Global Co-Lead of Turnaround & Restructuring Services, commented: “This environment, with a variety of financial forces at play, has made traditional financing avenues more challenging to access, and companies under stress are increasingly turning to alternatives like Liability Management Transactions. Ultimately, these efforts should be integrated into a broader turnaround plan, creating a vital record of sound decision-making by management teams and at the board level.”

The AlixPartners 2025 Turnaround and Transformation Survey is a pivotal resource for understanding the dynamics of global industries in distress.  The survey was conducted between March 27 – April 13, 2025, and included 371 lawyers, lenders, investment bankers, financial advisors, and other industry experts involved in corporate workouts representing more than 20 major industries in US, EMEA and Asia. It offers a snapshot of today’s challenges and a strategic lens for companies seeking to turn crisis into transformation. 

The full report, including recommendations for executives, is available here.