When times are hard, investors and owners have to choose the right measures to stabilise or reposition their company. The CFO, the CTO and the CRO all play a decisive part, and the choice of approach deserves careful thought.
A CFO with restructuring experience: a good foundation
A CFO who has been through restructurings, or has a track record at a restructuring specialist, can play a central role in a transformation. They strengthen the confidence of investors and banks, improve operational efficiency, cut costs and put the financial foundations under a strategic realignment. But a CFO is often confined to finance, or already stretched to capacity. If deeper structural change is needed, a temporary CTO is often better placed.
Chief Transformation Officer (CTO): independent and focused
An interim CTO can be particularly valuable in a crisis or a strategic realignment. Unlike a CFO, an interim CTO can usually act more independently of internal interests.
The advantages:
• Pushing through unpopular measures: a CTO takes necessary decisions with less regard for company politics.
• Independent judgement: as an outsider, they aren’t swayed by internal structures or political constraints.
• A focus on transformation: while a CFO handles operational tasks and reporting, a CTO can concentrate entirely on the change.
A CTO is ideal for a transformation. In an acute financial crisis, however, a CTO on their own is often not enough.
Chief Restructuring Officer (CRO): the crisis specialist
When insolvency looms, a CRO is often needed. They stabilise the company by:
• dealing with creditors, often negotiating simultaneously with banks, investors, the works council and all other relevant stakeholders, and in extreme cases with insolvency administrators
• focusing relentlessly on liquidity, to secure solvency in the short term
• negotiating lose/lose situations where necessary to save the company as a whole, which can mean navigating a hostile environment
• restructuring loan agreements: challenging existing arrangements to avoid a total loss takes specialist expertise.
A CRO works closely with the CFO but concentrates on the financial and operational turnaround and on tough cuts, together with the communication they require.
Investors should set the course early and choose the right leader for the situation. Acting too late significantly reduces the chances of a successful turnaround or transformation.
