Turnaround & Restructuring

Corporate crises follow a recognisable escalation logic: what begins as a management crisis triggers a strategic crisis, then a revenue crisis, an earnings crisis and finally a liquidity crisis. The earlier transformative measures are initiated, the greater the room for manoeuvre. For commerce and digitally driven companies, one crucial particularity applies here: the causes of margin erosion, revenue decline and competitive loss often lie in digital structures – misdirected channel strategies, excessive marketplace dependency, an outdated technology base or inadequate price architecture. A generic restructuring approach does not capture these levers.

Context & relevance

Classic turnaround management distinguishes four fields of action, applied according to the phase and depth of the crisis: the strategic turnaround aims at sustainable competitive positioning and business-model realignment; the operational turnaround at earnings improvement and liquidity protection; the structural turnaround at optimising the organisation and operating model; and the financial turnaround at restoring investor and bank confidence and returning to the exit path.

FOSTEC & Company combines these four classic fields of action with commerce depth and AI-supported analytical methods. Figure 1 shows the structure of these four fields of action with their respective objectives and measures. FOSTEC & Company’s service portfolio addresses all four fields – with specialised modules deployed modularly or in an integrated way according to the phase and depth of the crisis.

Figure 1: The four fields of action in turnaround management according to FOSTEC & Company

The objective of the strategic turnaround is the sustainable development of a competitive market position and the ability to generate returns. The company’s objectives, strategy and vision are realigned. This has implications for the current business model, business areas, market segments and the product and investment portfolio. The information relevant to these decisions is determined through market and competitor analyses. Strategic alliances should also be examined, in order to spread risk across several partners and to benefit from the expertise of others.

The objective of the operational turnaround is to improve the earnings situation, reduce capital lock-up and improve liquidity. Benchmarks are used to define restructuring targets, serving as a yardstick for measuring progress. Top-down measures are intended to reduce costs and increase revenue promptly. Despite the focus on cost reductions, costs must not be cut without direction, so as to avoid creating a demotivating internal environment. When liquidating assets, care must be taken to ensure that they are also not required in the medium and long term.

The structural turnaround focuses on optimising the entire company structure. This includes, among other things, the organisational structure and the quality of personnel, as well as the optimisation of production sites. Establishing a management and control system with decision-oriented reporting is likewise a central building block. Monitoring and reporting are intended to maintain the pressure to act, keeping the steering committee informed of the status of earnings and liquidity in short cycles. At the same time, monitoring and reporting also serve as a platform for feedback and communication from management to employees and vice versa.

The objective of the financial turnaround is to improve the equity structure and secure liquidity. In the short term, the aim is to secure survival through measures to avert impending insolvency. The priority is to safeguard liquidity, for example by reducing working capital, generating liquidity proceeds from divestments or through external financing measures. In the medium and long term, the goal is to create a healthy equity structure. Financial restructuring is an important precondition for implementing operational, structural and strategic restructuring, as it provides the necessary financial resources.

Our approach

The advisory approach follows a clear sequencing principle: rapid diagnosis, immediately effective stabilisation measures, structural realignment and finally preparation for a robust exit or growth phase. Seven clusters cover this path in full:

• Digital & Commerce Performance Diagnostic: Commerce-specific crisis diagnostics in 2-3 weeks: Revenue leakage, channel profitability, digital margin erosion and technology debt as the starting point of every turnaround intervention.
• Rapid Profit & Margin Recovery: 90-day stabilisation programme with quick wins, cost reduction and revenue recovery, structured as an integrated earnings-improvement programme with a clear business case per measure.
• AI-Accelerated Turnaround & Performance: AI as a turnaround accelerator: Automated P&L analyses, supplier screening and cash-flow forecasts significantly reduce the time from diagnosis to action.
• Commerce Turnaround & Channel Restructuring: Channel consolidation, reduction of one-sided marketplace dependencies, D2C profitability optimisation and eRetailer clean-up, the commerce-specific core product within the restructuring context.
• Rapid Operational Restructuring: A radically new operating model under time pressure: Cost-structure clean-up, process reorganisation and product-line rationalisation aimed at restoring operational capacity to act.
• Stakeholder Management & Turnaround Communication: Professional crisis communication towards PE investors, banks, employees and customers, with an equity story that restores trust and secures room for manoeuvre.
• Value Creation & Exit Recovery: Post-crisis repositioning: Recovery story, valuation levers and a return to the exit path, serving as a bridge back into the Transaction Advisory competence field.

The DACH market has specific characteristics that require a localised turnaround approach: regulatory conditions, ownership structures and the relevance of marketplaces such as Amazon differ substantially from Anglo-Saxon markets. FOSTEC & Company brings precisely this market knowledge to every turnaround mandate.

Results & impact

Clients receive a structured turnaround intervention: rapid diagnosis with clear prioritisation, a 90-day stabilisation programme with measurable quick wins, a commerce-specific restructuring strategy and a governance structure that implements measures consistently. Through its commerce-focused approach, PE investors gain a restructuring capability that generic IDW S6 advisers cannot provide – and thus the basis for a well-founded value-creation story even out of a crisis situation.

Let us assess in an introductory conversation which stabilisation and restructuring opportunities exist for your company – fast, pragmatic and with clear, actionable recommendations.