Troubled companies and their advisors are increasingly finding value in pursuing substantive balance sheet restructurings out of bankruptcy court. This shift has been driven by a number of factors, including the availability of risk capital, pressure from creditors to minimize costs, reduced management control in the context of bankruptcy, and the ability to negotiate favorable terms with severely impaired creditor constituencies.

As more companies facing financial distress seek to reorganize out of bankruptcy court, the key driver in right-sizing a balance sheet has shifted from aggressive legal tactics to savvy negotiating. Increasingly, advisors to distressed companies must be prepared to drive substantial, and potentially life-saving, change in their clients through impactful negotiations with key stakeholders.

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As the Red Queen told Alice, “My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.” This is often true with most companies, they must grow or the competition will leave them behind. In order to grow faster they must also make changes in their processes. The key to effectively managing change is to create a culture that is willing to embrace change as the new norm. To be effective, you must ensure the whole organization understands that the status quo will no longer be acceptable. The first step in creating a change-management culture is to get everyone’s head wrapped around some very basic definitions:

Management
Organization and coordination of the activities of an enterprise in accordance with certain policies in order to achieve clearly defined objectives

Change
To cause to be different

Change Management
A structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state

Change Agent
A person effective at change management

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In today’s business environment, it is not enough to stay on a level playing field with your competition: it is an essential ingredient in the formula for success to lead out your markets. Turbulence is a great place to be as long as you are the one creating that turbulence and defining the market. That leader’s position is the one that commands top margin performance and value to shareholders. Having lead a number of successful global transformations, I think it is time to net this process out to the four steps that will get you there, quickly.

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