Strategic Management Review > Vol 2 > Issue 2

Corporate Renewal and Turnaround of Troubled Businesses: The Private-Equity Advantage

Kathryn Rudie Harrigan, Columbia Business School, Columbia University, USA, , Brian M. Wing, Cerberus Operations and Advisory Company, LLP, USA,
Suggested Citation
Kathryn Rudie Harrigan and Brian M. Wing (2021), "Corporate Renewal and Turnaround of Troubled Businesses: The Private-Equity Advantage", Strategic Management Review: Vol. 2: No. 2, pp 363-390.

Publication Date: 14 Sep 2021
© 2021 now Publishers, Inc.
Turnaround processesdeclining performanceprivate equity investorsretrenchmentrecoverydivestiturefinancial ownersdistressed performancecreditorscapital costsmonetization


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In this article:
Financial Owners and Value Creation Via Turnarounds 
Declining Performance is Linked to Divestiture 
Successful Turnarounds Manage Details Closely 
Retaining the Executive Team (or Replacing them) 
Summary and Assumptions 
Implications for Future Research 


Turning around distressed operations is an alternative response to underperformance — as contrasted with using transactions such as divestitures or resource redeployment to deal with troublesome assets during corporate renewal. Taking the perspective of private-equity owners whose interests are primarily financial, we explain how their approach to turnarounds of troubled companies may differ from that of managers within publicly traded firms who may envision the realization of longer-term sources of operating synergy among their firms' lines of business. Financial owners can revitalize firms' performance more effectively because they use turnarounds differently. Observations have implications for consulting engagements involving organizational decline, for corporate directors who must respond to outside pressures for performance improvements from shareholder activists, as well as for managers who are faced with corporate renewal challenges inside their companies. Managers within publicly traded firms are not maximizing value for their firm's investors if they cannot turn around troubled operations effectively.



Strategic Management Review, Volume 2, Issue 2 Special issue on Corporate Renewal
See the other articles that are part of this special issue.