Proposing the variable finance capacity model for fundamental moments in turnarounds

Abstract

How long is it going to last, and what is it going to cost? These are the two most basic questions asked during a turnaround. These questions are asked by all stakeholders who may be affected by the turnaround. The answers to these questions may inter-alia influence an employee to leave or stay for the duration of the turnaround or whether an equity provider may want to invest in the turnaround or not. Being able to answer these basic questions may shape the outcome of the actual turnaround. In this thesis, an algebraic model was developed to determine the duration, the breakeven point, the cash nadir point and the value of the nadir during a turnaround. An autoethnographic approach was adopted to understand the research problem, which resulted in a process of mathematising the knowledge gained from real-world experiences. Fundamental moments of turnarounds were derived from the Variable Finance Capacity model to answer the key questions of a turnaround. The thesis provides a framework for utilising the variable finance capacity model and fundamental moments to make informed decisions and establish a standardised nomenclature for these moments during a turnaround thereby serving all stakeholders.