Two of the most important questions for a challenged entity is how much a turnaround will cost and how long will it take. These are valid economic queries - especially for a challenged entity facing a difficult task. In our "Determining the True Cost of a Business Turnaround Part One" blog, we discussed the beginnings of quantifying the cost of a turnaround.
Unfortunately - there is not a single amount or formula. The prices range on experience, credentials, risks and uniqueness of the engagement. Before attempting to quantify the costs of a turnaround, let me state the range is wide. If you need a proven specialist to correct / mitigate the exposures of the entity, the adage of "you get what you pay for" stands true. The reality of the situation is that the same team that got you "into this ditch" - is not the same team that can get you refocused and back on track. If this was the team to "own the problems" - would you be in this situtation?
The vast majority of turnarounds require a full-time commitment from the turnaround specialist. It is not a part-time engagement. The key abilities a turnaround specialist must possess include executing on a timely basis and triaging the number of negative issues one is confronting. There is no replacement for an on-site turnaround specialist who is physically in the trenches addressing the challenges. Before summarizing the costs of a turnaround, let me outline a few factors in the determination of the costs:
Obviously, the risk factors above determine the costs and time of a turnaround - but a most preliminary estimate is, on an average hourly basis (includes Directors / Staff) of $1,850 per day, for a period of approximately 120 days - which equates to $222,000. These estimates consider the average middle market entity in the United States with no international sites.