ANNEX VIII : MORE ABOUT PHASE I OF OUR SERVICES
The purpose of this assessment is a quick diagnosis of the client company
and its potential for turnaround. Amongst others, I need to find out how the
company and its management had been performing in relation to the
following :
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in terms of profitability and the management of the balance sheet,
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as compared with its industry, in financial and operating terms,
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as compared with sound business practices, in policy and operating
terms,
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in relation to existing opportunities.
I need to analyze the above to find out if there are significant "productivity reserves" that
can be
tapped to make the company viable again. I have to make it as certain as I am able to, that the potential for
turnaround of your company is real, and that the risks involved are
manageable.
Alex Wolf & Associates would undertake such a diagnosis
without charging fees for it, only if we feel there is a good
prospect for contracting subsequent turnaround services.
This diagnosis will determine the strengths and weaknesses of the
company (including its management and information systems) with a view
to perform a turnaround. In particular, we need to determine the key risks in
accomplishing the turnaround, and key potentials for turnaround – in
relation to financial, marketing, production, and all other key
operating factors.
I would spend 10 to 14 days on this work, much of it on your
premises, visiting your facilities, reviewing the work flow of key
departments and the management process in your company. I
would need to speak with your key executives and some of your other
staff, including foremen and supervisors, some of your customers, some of
your suppliers and some of your lenders, your inside and outside
accountants, and I would need to speak repeatedly with the owner or a representative
of the board of directors.
The protocol for all these discussions will be agreed upon before my
assessment visit. Also before this visit, I will review the
documentation you will send to me, including financial reports, both
historical (10 years) and recent interim reports. Of course,
confidentiality is guaranteed.
Upon completion of my assessment, I will present my findings and
conclusions concerning the feasibility of turnaround. This will be done
either at the end of my fact-finding visit, or if some additional
research is required, on a return trip shortly later.
If the company desires to engage the turnaround services of Alex Wolf
& Associates on the basis of predominantly results-based fees, the assessment
can be at no charge,
but the company will pay all out-of-pocket expenses, i.e. travel, hotel, communication and other related expenses.
If subsequent to our assessment, we accept to turn your company
around on the basis of a predominantly results-based fee, I will work
for you for several months before we could bill the first part of our
fee. After that I will work again for several months before we could
bill the next part of our results-based fee. And so on, for a year or
two, working the long hours that are necessary to achieve a turnaround.
Compared to that investment, our investment in the assessment of Phase I
is minor. Still, it will be 10 or 14 days of my work, plus travel time,
and we would agree to perform this work without charge only if we feel
that the client's intentions are serious.
It is in our mutual interest that my assessment in Phase I be as
factual and as correct as possible. Your cooperation, therefore, will be
vital and a plan for my visit should be agreed upon beforehand.
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