Turnaround Success

A successful turnaround is difficult to measure, but it generally depends on the goals agreed on in the turnaround concept. In general, a successful turnaround is reached once a substantial and enduring positive change in the company’s results is reached. A turnaround is considered

to be successful if „a firm undergoes a survival threatening decline over a period of years but is able to reverse the performance decline, end the threat to firm survival, and achieve sustained profitability“.37 The term „sustainable“ is also used in definitions,38 for example, a „sustainable recovery“ is what distinguishes a successful turnaround from those that „survive only in the short term and then become insolvent, and those which achieve what [they] call sustainable recovery“.39

A sustainable recovery is accomplished if the company achieves:40

  •  A viable, defensible business strategy
  •  An adequate organization and control structure

and if it is:41

  •  Making „good“ profits
  •  Unlikely to face another crisis in the foreseeable future

Additionally, a company can be called successful after a turnaround if the „upturn recovery stage [is] normally four years or longer“.42

Clearly the terms of a successful turnaround need to be explicitly described in the turnaround concept devised for each company. A successful turnaround cannot be limited to a specific definition since, in practice, the goals of one company’s turnaround may vary significantly from the goals of another.

37 (Barker & Duhaime, 1997, S. 18)

38 (Pandit, 2000, p. 32)

39 (Slatter & Lovett, Corporate Turnaround: Managing Companies in Distress, 1999, p. 3)

40 (Slatter & Lovett, 2004)

41 (Slatter & Lovett, 2004, p. 3)

42 (Bibeault, 1981, p. 83)