What the world needs now is….

The G20 summit in many ways now seems like a distant memory. After a market rally pushed the FTSE 100 above 4000 we are now back to the consistent volatility of recent times. Despite the numerous fiscal stimuli we are still left to wonder what impact, if any, this will have on real businesses and real people in the UK. The big question remains – how and when will all this additional capital filter through to those businesses, particularly SMEs, that desperately need it and when will the banks get back to some kind of normality?

Clearly, times like these highlight the great inequalities that exist in the world, none more so than RBS’ announcement of 9000 more redundancies. In light of Sir Fred’s seven hundred thousand pound yearly pension pot those 9000 people will be feeling mightily aggrieved, and so they should.

Putting Sir Fred and all the other now impotent ‘masters of the universe’ to one side the simple fact remains that we need our banks to function as they should (providing the platform for growth by way of credit, loans, working capital etc) and as quickly as possible. The longer it takes to clean up the banks and get them lending again the longer we will be stuck in the current maelstrom.

As much as it pains many to say it we need banks, we need bankers, we need traders, we need deal makers, we need investors, and we certainly need to start taking a few more risks. Without risk business growth does not exist, without banks businesses do not have the sufficient working capital and funding to grow, acquire businesses, enter new markets, and ultimately employ more people. Executive pay and the reward for failure has and always will be a contentious issue, but I get the feeling at the moment it is providing Gordon Brown and the government with a perfect distraction from there own failings and how badly they have managed the recession since the credit crunch.

Economists, politicians, and central banks continue to look for the financial equivalent of the philosopher’s stone, desperately trying to turn toxic assets back in to the gold they once were and get economies moving again. Ultimately however panaceas only exist in Greek mythology and as much gold dust as Barack Obama clearly has businesses need to start making decisions quickly on how to get through these tough times. Barack Obama can’t solve all the worlds’ problems and there will not be a sudden turnaround in fortunes, no matter how much we want it

Interim managers will have an increasingly important role to play when businesses get through the current decision paralysis and stop waiting for this said panacea. Bringing on board an experienced interim with operational and financial restructuring experience can provide a big shot in the arm and get a lot done in a very short time. They tend to have a different perspective from the ‘conventional wisdom’ that exists within a business and are focussed on solutions and the future rather than past failings. They are also able to draw a line in the sand and get people on board quickly as they are not attached to any of the problems that exist within the business. What the world needs now is experienced Interim Managers! Doug Baird is Managing Director and Head of the Private Equity Practice of Interim Partners.

One Response to “What the world needs now is….”

1. Paul W Says:
   April 28th, 2009 at 2:58 pm

   In the “old days” if a leveraged PE deal got out of shape it was put into turnaround and interims managers called for. I understand that the banks are now more concerned about being overwhelmed by restructuring proposals and are instead just hoping that the current management will continue to run the business. At some point these flashing amber lights will have to be dealt with and I suspect it will be interims that will be in the thick of it

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