I'd love to learn more about turnarounds

June 20, 2025

by a searcher from Georgetown University - The McDonough School of Business in Charlotte, NC, USA

Now that we've had a few years of high interest rates and more challenging economic conditions, I've started to see a few businesses that look like turnarounds. I'm using the term generously for anything with multiple years of decreasing revenue or worse. Does anyone have some insight on evaluating them or where to get more info?

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Reply by an intermediary
from The University of Chicago in Chicago, IL, USA

There are different kinds of turnarounds. 1) Right side of the balance sheet: Company is overleveraged. 2) left side of the balance sheet: Company's products/services are no longer competitive or not needed. 3) Right side and left side of the balance sheet are ok but demand for product/services has declined due to general economic condition. Two of the businesses I sold recently have suffered. Fundamentals of the businesses in long term are still goo. Both owners have found ways to keep their head above water. It appears you are looking to buy such a business where recent trend is negative, but the outlook is positive i.e. you are not catching a falling knife. I presume seller does not have debt or has low debt. A possible approach may be to have a large forgivable note with zero interest. Convincing SBA may be a challenge.

Reply by a searcher
in Toronto, ON, Canada

My 2 cents - I bet there is a ton of opportunity in this area (with more risk of course). It does seem that every searcher is looking for the same deal, with perfect characteristics and 0 red flags. When there is a deal that checks those boxes, you'll be competing with dozens of other people. I've seen first hand businesses that are in a turnaround position because it was simply a lifestyle business with no intention of being sold, despite being fundamentally a decent business. There is likely a lot of room for creative deal structuring and then once you're in the game, future (better) acquisitions will start showing up more easily

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