University Students and Professor

COLLEGE COST CONTAINMENT, RESTRUCTURING, AND TURNAROUND

Expertise. Intuition. Ingenuity.

 

COST CONTAINMENT, RESTRUCTURING, AND TURNAROUND SERVICES

This service assists distressed and underperforming postsecondary institutions in their efforts to understand and address institutional inefficiencies and take formidable steps toward achieving economic equilibrium, where there exists a state of long-term financial sustainability. Through a disciplined institutional audit, this exercise will first identify the degree and magnitude of the existing equilibrium gap and then provide systematic recommendations on mitigating the gap to achieve stability.

Terra Firma’s restructuring and turnaround services are meant to assist and lead institutions through a turnaround.  As such, we approach this work with sensitivity, recognizing that leadership teams and employees are often working within an environment of great stress, where management has experienced failure, the institution has lost market share, and financials and operating margins are deteriorating. Our philosophy, and in fact our motto, is “onward with purpose”.  Therefore, we will not dwell on the institutional past or allow an environment conducive to passing blame.  We have an intentional bias to be action-oriented, transparent, honest, and sensitive to all stakeholders.  We will work tirelessly and objectively to offer decisive recommendations on what is in the best interest of the institution rather than any constituency, agenda, or interest.

Our goal will be to focus the institution on core viable businesses and strategies, significantly reduce expenses, eliminate unprofitable operations and programs, redeploy assets and resources, evaluate debt obligations, and strategically and tactically invest in targeted programs and endeavors to increase revenues.

Numerous financial and non-financial factors, ratios, trends, and forecasts affect the economic equilibrium of institutions.  As such, there is risk in oversimplifying what economic equilibrium looks like for any institution.  However, Terra Firma believes certain attributes distinguish a distressed institution from a solvent and viable one.  These include:

  • A history of meeting financial and non-financial obligations of creditors and lenders

  • A history of building and achieving a balanced budget

  • Establishing a Primary Reserve Ratio of at least .4 to mitigate risk and cover periodic deficits in cash flow

  • Establishing a Net Income Ratio of at least 2% and target of 4% or more to build cash reserves, mitigate debt, and invest in strategic initiatives

Our efforts will focus intensely on achieving these objectives in the near term.  A variety of strategies and processes may be deployed based upon needs and current institutional realities.  This often includes completing a situational analysis and development and implementation of a Turnaround Plan.  The Turnaround Plan will often include expense reductions through targeted elimination of non-viable or non-essential programs, revisiting terms with lenders and creditors, restructuring or outsourcing to further mitigate operating and personnel expenses, identifying new sources of revenue, investing in new initiatives, and establishing strategic partnerships, joint ventures, and new marketing strategies.

Our role can range from serving as a restructuring consultant to more substantial, integrated roles such as Chief Restructuring Officer, EVP/COO, or appointment as Interim President.  The scope of our services will be based upon the level of need, exigency, and resources.

Projected length of engagement:

6 months – 3 years

Certified Turnaround Analyst

Dr. Jamie Caridi  holds the prestigious designation as a Certified Turnaround Analyst from the Turnaround Management Association.  This certification demonstrates proficiency and aptitude toward meeting the educational and professional requirements and competencies necessary for work within the corporate renewal, restructuring and turnaround industry.

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