What still deserves to be saved?

What Still Deserves to Be Saved?

Recovery fails when management treats every inherited activity as equally entitled to survive. The first task is to separate viable economic engines and reusable capabilities from businesses sustained by cross-subsidy, optimistic forecasts or the fear of recognising loss. Saving value is different from preserving the current shape.

Assess each business at the smallest level with meaningfully independent demand and cash flow. Test customer need, contribution after avoidable cost, working-capital burden, reinvestment, competitive position and time to recovery. Remove historical corporate allocations, but add the real standalone capabilities required. Distinguish a sound operation with an unsustainable balance sheet from an operation that destroys cash before financing.

IAS 36 offers a useful discipline: assess recoverability at the smallest cash-generating unit and compare value in use with fair value less disposal costs. A turnaround needs a similar dual view. Some assets are worth more rebuilt inside the system; others release greater value through sale, partnership, run-off or transfer to an owner with different capabilities.

Capabilities require their own test. Customer access, licences, talent, data, technology or supplier positions may deserve protection even when the product around them does not. Name the future use, cost to preserve and expiry of the option. Avoid keeping an entire loss-making structure merely because one valuable element has not been separated.

Create a triage map: invest, stabilise, harvest, separate or close, with liquidity required and evidence for each decision. Act before cash scarcity removes the best options. OECD work on insolvency stresses timely restructuring of viable firms and exit of non-viable ones because delayed distinction traps capital. Recovery begins when hope is replaced by explicit recoverability.