Turnaround financing-paradigm shift for emerging perspective financing for CFO's

There are two basic reasons for considering turnaround investing. First, properly structured and executed, turnarounds can produce excellent profits, thereby making a disproportionate contribution to financing corporate pension obligations. Some turnaround managers working with public companies in trouble have produced returns of more than 100 percent annually.

A second reason is that turnaround investing parallels a CFO's experience and skills more closely than many other forms of investment and is far less subject to exogenous factors, such as the stock market. CFOs understand the basic approach and tools used by turnaround managers and can actively comment on and judge what is being done to enhance the value of the investments

In a turnaround, the role of the Chief Financial Officer (CFO) is more important than at any other time in the corporate life cycle. The CFO's importance is based on the harsh realities of difficult financial circumstances. Severe external and internal pressures cause this time to be one of test and challenge. Successful turnaround CFOs know that their role is much broader and more creative than a mere hatchet man or super cost cutter. Instead, the organization requires that financial perspective be injected into every area of decision-making and strategy. As a company grows towards an exit/liquidation event, a strategic planning process is essential. This is not as much a document, but more an ongoing process to analyze and describe the strategic goals and tactical implementation. Parts of the strategic plan The CFO Guides the business through the preparation for an exit strategy in order to maximize enterprise value.

This paper has two aims. On the one hand, it adds to a growing but still sparse literature on the work practices of the leader of the accounting and finance function or the Chief Financial Officer (CFO). How does one enact being a CFO? On the other hand, this paper addresses a curiosity in the management regarding a new CFO agenda: the activist; CFO responsibilities have moved far beyond what the title itself suggests. Indeed, research shows that the CFO, in many cases, is actually doing the job of the COO, a position that is slowly being eliminated-which involves line-management decision-making. As such, this paper reflects a re-engagement of CFO's through innovative thinking, efficient processes, and relevant information technology strategies.