How to Recognise a Distressed Company


How to Recognise a Distressed Company

Distressed Companies – a nasty business!  As a leader, you need to know where to look for the signs that indicate a distressed company. Often managers continue with a ‘business as usual’ approach without recognising that the parameters have changed and can be slow to realise that what used to work is not going to work again.

In Doug Yakola’s recent article, the McKinsey Partner has cited typical signs of distressed companies, including management turnover, shrinking EBITDA margins, large contingent liabilities and other working capital and liquidity challenges, and various financial signals such as downgrades in debt ratings and inability to meet debt covenants, that can help identify companies in trouble.

What is required, according to Yakola, is a thorough review and a new, objective strategy to get the turnaround started. The article makes interesting reading.  Click here to read the full text.