From stress to stability: Lessons from real UK turnarounds

For many boards and senior leadership teams, stress creeps in long before a formal crisis. Cash is tighter than forecast, key people leave, costs rise faster than revenues. Everyone can feel the pressure – but no one quite knows when, or how, to intervene.

At our recent webinar on stress to stability: lessons from real UK turnarounds, leaders from health and welfare charity Leonard Cheshire (Ruth Owen OBE) and Oxford and Cotswold’s solicitors Hedges Law (Nicola Poole), joined their S&W advisers Andrew Pepper and James Dowdall, sharing what it really takes to navigate that moment.

Their experiences, from two distinct sectors, underline a consistent truth: Turnarounds rarely fail because the problem was missed; they fail because action came too late.

One of the recurring themes in the discussion was the distinction between businesses that are distressed and those that are merely stressed.

Stressed businesses can still pay staff, meet near-term obligations and trade. But beneath the surface, they are running out of room. The cash runway is shortening and forecasts rely on events “turning up”. Decisions are deferred in the hope that normality will ensue.

This is often the most dangerous phase. As Andrew Pepper, Head of Special Situations, observed: “Many failures are preceded by months of optimism that are no longer grounded in commercial reality.”

Early engagement, before insolvency processes loom, preserves options. It creates time to reshape the business, access capital, explore strategic transactions and keep outcomes solvent.

Both turnaround stories shared a common starting point: a clear, credible plan.

At Leonard Cheshire, that meant confronting difficult truths about cost, complexity and focus – while remaining anchored to the organisation’s core purpose and the people it exists to support. In practice, this demanded tough decisions about what the charity could realistically sustain, alongside a renewed commitment to financial discipline.

At Hedges Law, the plan began with brutal honesty. Market pressures, rising costs and staff attrition were set out clearly, alongside a realistic assessment of what could be fixed – and what could not – without fresh capital.

Hope, on its own, was not enough. As S&W’s Head of Accelerated M&A, James Dowdall, puts it plainly: “Hope isn’t a strategy.”

What mattered was not perfection, but credibility. Investors, lenders and advisers responded to plans that acknowledged past mistakes, articulated a clear route forward and could withstand challenges.

In stressful situations, the instinct to reassure can be strong. But vague assurances, especially about cash or timing, erode trust quickly.
Instead, the discussion highlighted two effective approaches to stakeholder communication, applied in different ways but underpinned by the same principle.

For Hedges Law, confidentiality was essential. The situation was managed discreetly by a tight leadership group to avoid destabilising staff and clients while options were explored.

Conversely, at Leonard Cheshire, openness was critical. With donors, regulators, trustees, staff and residents all affected, communication had to be frequent, clear and grounded in empathy.

Despite these differences, both experiences reinforced the value of authenticity. Difficult conversations, held early and backed by evidence, built credibility. Over promising did not.

Strong brands and long histories can create a false sense of security. Several speakers reflected on organisations that assumed they would always endure – until they ceased to.

Blue-sky thinking has a role in any recovery. But when it is not tested against numbers, cash flow and operational reality, it becomes a liability.

In both the turnarounds in question, progress depended on refocusing on core activities: those that generated sustainable value and could be funded properly. In practice, that meant consolidation before growth – and the discipline to say no to even worthwhile initiatives, when their affordability was doubtful.

This balance of ambition, tempered by realism, proved essential in rebuilding resilience.

Turnarounds rarely fund themselves. Cash generation often improves only after difficult changes are made.

The pathway to stability typically involved a combination of measures: careful prioritisation of payments, intensive creditor engagement, extensions or time-to-pay arrangements and, where appropriate, fresh investment through accelerated transactions.

What made these conversations work was preparation. Clear data rooms, credible forecasts and consistent messaging allowed stakeholders to see that short-term support increased the likelihood of recovery – and ultimately improved outcomes for all involved.

Perhaps the most powerful takeaway from the session was not technical, but human.

Both leaders, Owen and Poole, spoke candidly about fear, fatigue and self-doubt – and the personal cost of carrying a business through uncertainty. It helped that they could rely on their advisers for emotional confidence and resilience through some of their darkest days. Looking back, the advice was consistent:   

• Act earlier, even if it feels uncomfortable
• Be honest with yourself, before asking others to be honest with you
• Build a team around you that has been through it before

As was the case for Owen and Poole, where stress was on the horizon, they took early action and are now remarkably in a position of growth and looking to acquire other businesses in a short turnaround timeframe.

Big organisations do not necessarily have a monopoly on good decisions. Smaller, well-run businesses with leadership clarity and professional support can navigate stress successfully – and emerge stronger. 

Stress is not a failure, but ignoring it is. Businesses that confront reality early, communicate openly and secure the right mix of advice and capital retain control over their future.

If your organisation is starting to feel stretched, the most important decision may simply be to start the conversation.

If you would like to discuss any of the issues raised in our turnarounds, or to explore how early intervention can protect value and your range of options available, get into contact today.