The R.N. Seidman & Partners, Ltd.("RNS") Specialist: Who We Are-What We Do

What is an RNS Specialist?"                                                        Restore Credibility
What does the RNS Specialist bring to the table?                      Negotiate and Lead
How does the RNS Specialist operate?
How can you recognize when you should speak with a Specialist?
Engaging the RNS Specialist

During the past few years you may have encountered the term "Turnaround Specialist" or "Crisis Manager". As these Specialists work mainly with underperforming and/or troubled companies, it is important for company owners and managers to understand who the Specialist is, what they do and how to work with them.

The Specialist has become a critical addition to the team seeking to guide a business through a crisis and back on the road to profitability. This team usually consists of company management, counsel, the independent accountant and the Specialist. An understanding of the RNS role is particularly important as the RNS Specialist can be most useful when brought into a problem situation before it is too late.

What is an RNS Specialist?:

The RNS Specialist is first and foremost a businessperson experienced in managing troubled companies in various stages of distress. Our experience covers many different industries. We handle the business issues as opposed to the legal problems of the company. Most of our work is with smaller, private or public companies out of the glare of publicity.

In a critical situation, the RNS Specialist concentrates on stabilizing the situation that is threatening the immediate survival of the business (such as negative cash flow or a calling of the loan by the bank). Simultaneously, we will perform a business viability analysis and begin to prepare either a Recovery or Orderly Liquidation Plan. If requested, we will assume the role of CEO, CFO or GM for a period of time and guide the company through the recovery and growth process.

Restoring Credibility: The management of a troubled business has often lost much of their credibility with lenders, suppliers, employees, customers, professionals, non active shareholders and the community at large. Retaining a Turnaround Specialist is often the first sign to these constituencies that the company is taking positive steps toward both a recovery and in rebuilding damaged relationships.

Leadership and Motivation: Where the RNS Specialist differs from most other business consultants is that we have managed businesses amidst the chaos, stress and uncertainties of a crisis or turnaround; some of us are entrepreneurs and survivors of their own troubled businesses. Unlike general business consultants, the RNS Specialist is more direct in his approach and decisive in his recommendations and actions: We "tell it like it is."

Negotiator and Leader: The RNS Specialist is experienced in negotiating with lenders and trade suppliers in the midst of a crisis. Additionally, we are experienced leaders. Functioning as both coach and quarterback, we work with sales, production, finance, etc. in setting and implementing goals and priorities that keep everyone (including the creditors and the professionals) on the same track. Nothing can be more dysfunctional in a crisis situation than having everyone off in their own direction with their own agenda. The RNS Specialist brings leadership skills, personal integrity, credibility and a track record to the table where current management has usually lost these attributes.

Functioning as The "Nerve Center."  Word of trouble travels quickly, and the telephone has a tendency to ring often from concerned outsiders. In most cases the company staff is not ready to deal with the environment that trouble brings. The RNS Specialist is the best equipped to serve as the business' temporary nerve center.

Knowledge of Sources of Financing. RNS has a network of debt and equity sources familiar with financing of troubled businesses and can use our credibility with these sources to assist in securing any necessary financing.

How the RNS Specialist operates:

The RNS Specialist must assess the business and face a series of questions that existing management has probably never asked itself: What is the purpose of the business; should it be saved; if so, why; are these reasons truly valid in the light of all circumstances? (It should be emphasized here that in 99 cases out of 100, the problem is not merely lack of money!)

The RNS Specialist must gather information, evaluate it for accuracy, and analyze it quickly so that those initial questions can be addressed openly and honestly. That process focuses upon the following issues: Is the business viable; is there a core business which can be saved and be the source for emerging from the crisis; is there a proper product/market matching; are there sufficient sources of cash to fuel the recovery; is existing management capable of leading the company?

If the answers to these questions are "No", then our task could become one of a plan for orderly liquidation whose objective might be a fair settlement with the creditors while preserving as much of the personal assets of the owners as possible.

The Recovery Process:

What kind of plan is needed to reverse the losses, return to profitability and maximize the value of the business? After the fact-finding and analysis stages described above have been completed, the RNS Specialist, working with all levels of management, the outside accountants and counsel, leads the management team in the preparation of a comprehensive, detailed Recovery Plan. The Plan identifies and analyzes alternative courses of action and backs up its conclusions with detailed discussions and quantification of the company's strengths and weaknesses and describes and quantifies how each element of the business (manufacturing, marketing, customer service, finance, etc.) must interface.

During this process, the RNS Specialist serves as liaison or intermediary with the outside constituencies and presents bad news as a preamble to a Plan of Recovery. RNS Specialists employ their own credibility and become an advocate of the Plan.

The "Business" and The "Trouble." Perhaps the most difficult problem with a business in distress is that it involves two processes: the business and the trouble. Managing the abnormalities of distress is not only time consuming but also requires special skills. This is where the RNS Specialist brings his knowledge and unique experiences to the process.

Inability of management to make decisions: Many managers, and even long time owners of businesses, tend to "freeze up" in a crisis. Though they may have been running the business for years, through prosperity and downturns, when a business threatening crisis confronts them, they are often unable to prioritize and make decisions; at times, a decision made last week is reversed this week.

A Consultant or an Interim Manager? Many troubled businesses have a tendency to lean toward a consultant initially, unwilling to turn over the operations to a newcomer. Though existing management's initial assessment may be correct, the troubled business must be willing to accept that an Interim Manager may be just what the doctor ordered and what the patient needs to survive.

Industry Expert or Generalist?

Another issue in selecting a Specialist is whether to opt for an "expert" in the whole or a part of the business or a generalist. In many instances the last thing a troubled business needs is another industry expert. Often, there is sufficient knowledge within the company to provide that input. The generalist who has managed many businesses, especially those in crisis, brings this special expertise to the table. It is often this very expertise that is lacking in the company. However, the RNS Specialist will recognize when expertise beyond his experience and training is necessary. Naturally, each case would be decided on its merits.

In the case of a company in Chapter 11, engaging an RNS Specialist should be considered by any of the interested parties (Debtor, Secured or General Creditor, Stockholder, etc.). Engaging the RNS Specialist should also be contemplated as an alternative to a court appointed Trustee.

How does the RNS Specialist interface with others?

What is often frustrating in these situations is the lack of timely and credible information. In addition, these situations have a tendency to deteriorate rapidly and/or take unexpected turns. Most frustrating, decisions tend not to be made.

The RNS Specialist is a businessperson dealing with the problems of the business. Once in place, the company becomes stabilized, everyone is on the same track and a clear, reliable picture of the situation emerges. Continuous and reliable data flows to various constituencies thereby enhancing the ability to negotiate and to litigate the legal issues.

In Summary: The RNS Specialist is a businessperson uniquely experienced in dealing with the business related problems of a company in distress. The distress can take the form of continuous losses over a period of time or a business threatening crisis. Where existing management may have lost its credibility with lenders, vendors, employees, etc., the RNS Specialist brings his own credibility to the table thus restoring confidence in the ability of the company to recover. Where management may have lost its flexibility, the RNS Specialist restores it. The RNS Specialist will stabilize a chaotic situation, assess the viability of a business and develop and implement a recovery plan.

In a crisis, decisions tend not to be made; the functional departments of the company (i.e. production, sales, etc.) may be off on different tracks. The RNS Specialist provides the leadership in setting and implementing goals and priorities to get everyone working in the same direction.

The probability of recovery is significantly enhanced with an RNS Specialist in place. Management should not hesitate to speak with us as soon as trouble is cited--before the situation becomes a crisis.

We are pleased to offer an initial consultation at no charge.

© 1999, 2001 R.N. Seidman & Partners, Ltd.

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