Within the corporate world, there are the ‘living dead’, which are the sick companies that
go to a miserable existence, without any hope of change. These companies need a
miracle like the resurrection from the dead. Many of these companies need a change of
DNA or business models. They are technically commercially insolvent and the owners
will face the fate of bankruptcy if they go out of business. Therefore, these ‘living
dead’ just hang around, waiting for the death sentence. For some, the death sentence may
it would be years before the owners decided not to invest more money to pursue
bad money For others, the bubble continues to grow, like construction.
companies in Singapore that continue to insure loss-making projects to cover up the
previous losses.
Some of these ‘walking dead’ are large companies with huge bank debts.
However, the banks are not willing to liquidate these companies, as someone said: When
you owe a lot of money to the bank, you owe the bank.” These banks can fail together
with these “living dead”. Therefore, these undead can survive in the short
finished. An example is the corporate empire of Donald Trump that entered into massive financial operations.
difficulties in the 1980s. He owed a lot of money to the banks then and the banks were
unable to pull the trigger to stop the flow of credit as they would be swept down with
to the
If businesses find themselves caught in such situations, the owners must make some tough decisions.
to get out of this moment. It is important to know when to leave. An optimized output is a
of exiting secondary or underperforming businesses, where there is a loss of
confidence in management and more losses and a decline in profitability are expected.
Removing such underperforming assets can free up capital for core investments
business
If you can optimize your output, then you are no longer perceived as organizational
failure but rather unlocking of their values. Optimized exits must be done strategically
instead of doing it out of desperation. This is because when it is done out of desperation
and panic, very often the value of the company is diminished. Successful exits require a
lots of planning and can maximize shareholder value, minimize cost, liability and
disruption and enhances the value of the company.
Optimized output is necessary for many ‘undead’. For some it may mean cleaning the
“hedged” prior to an acquisition or the integration of a large acquisition that included nonessential or
non-performing assets. For others, the business model must be renewed with the market.
changes. Management must be able to rescue the company from the dire situation.
and scarce resources must be redistributed elsewhere for better returns. for some
others, it may be that the shareholders and owners get tired of the business and
decide to move on to do something else.
There are several channels to rescue the company. One way is to sell the business as a
constant worry. Another way is to try to make the company go from being financial
losses before disposal. If the company has a bleak chance of recovery, it is better
Shut down the business immediately, cut your losses, and move on. There’s nothing to be ashamed of
about your company going bankrupt. Many successful entrepreneurs suffered failures in
their previous companies. They are capable of making subsequent comebacks. it is better to bite
the bullet, avoid bankruptcy and recoup losses and fight another day than be totally swept away
to the bottom for trying to salvage an unfortunate situation.
It’s often hard to get a good price or premium when selling a troubled business.
Many acquirers try to avoid buying a company that generates losses like the plague. they will find
very difficult to convince its shareholders to assume the risks of acquiring a
losing company. For example, in China, some losses and state-owned
Firms are offered for sale at $1 without acquiring past liabilities. Yet,
there are few takers. You never know the total liability you may be buying.
In Singapore, some businesses are conducted at a loss. high rental costs,
expensive staffing etc. have eroded all profits. how many
entrepreneurs felt trapped and reluctant to close their business as they will have to
proceed with bankruptcy proceedings immediately. However, any delay in closing
such companies may frustrate any hope of recovering losses.
There are a few points to consider before you start saving the company. Worth it
pain and effort? Do you want me to keep throwing good money to chase
bad money? Therefore, one must ask oneself if one’s company is worth more dead than
live? If he looks very much like a vampire, neither alive nor dead, but lives on nutrients and
the sustenance of living blood, then it is time to drive a stake through the heart and
alleviate the misery of the ‘living dead’. It is better to be dead than alive.