Looking for the Light

Guiding a company through a turnaround is no easy feat, but CFOs who can do it are in high demand.

Finance executives can increase the odds of winning such flexibility by communicating clearly and frequently to all parties and demonstrating a command of all of the facts of the company’s situation. “It’s an art form that the CFO has to learn. It’s pretty amazing how much more cooperation you get from lenders when they have confidence that you’re making things transparent and not trying to do things to circumvent their interests,” says Sanginario.

“You need to be able to explain the situation to lenders in a thorough, comprehensive, honest way,” agrees Houlihan Lokey’s Cleveland. “Acknowledge any management missteps, show the desire to fix the problem, and describe any strategies that have been put in place to do so.”

Telling lenders that the company has closed underperforming locations and reduced head count helps demonstrate that the management team grasps the gravity of the situation and is already working to improve things. That’s far better than living in a state of denial, a reaction that turnaround experts say is a common problem among executives at troubled firms. “It goes a lot easier if you can point people to something positive that you’re doing, rather than just throwing up your hands,” says Moriarty.

If all of this sounds exhausting, it is. While experts and finance chiefs alike acknowledge that restructuring a company and leading it through a turnaround is grueling, it is also an incredibly valuable experience, and one that truly can take a CFO to the next level. “It’s a tremendous career opportunity, because so few people have that trial-by-fire experience,” says Cleveland. “From a personal standpoint, a CFO should look at it as the hardest 12-to-18 months of his or her professional career, but know that it will pay long-term rewards.”

Kate O’Sullivan is a deputy editor at CFO.

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