Why It Pays To Suggest a Turnaround Consultant Early

In today’s volatile economy, even well-run businesses can stumble. That’s why banks sometimes encourage borrowers to bring in turnaround consultants early—before things spiral. 

That’s one of the core messages in a new RMA Journal article by Ken Yager and Jason Alpert—two professionals with decades of experience in turnaround consulting and loan workouts. 

Yager and Alpert point out that turnaround consultants aren’t just for companies in default or bankruptcy. While formal engagement often requires a trigger—default, a court order, or transfer to workout—banks can suggest a consultant anytime signs of distress appear. Early involvement, the authors argue, can preserve relationships, protect collateral, and even sway future bankruptcy outcomes in the borrower’s favor. 

What they do: Turnaround pros can help with cash flow forecasting, stakeholder negotiation, and even hands-on management. Some specialize in finance, others in operations. A consultant might become interim leadership or simply advise from the sidelines, helping the borrower build a recovery plan. Either way, they’re embedded with the borrower—not the bank—and are focused on rapid stabilization. 

When to act: If cash is slipping, covenants are tripping, or the borrower can’t explain their numbers, it’s time to act. Sudden shocks—like losing a major customer or facing unexpected regulatory costs—can also justify a consultant’s involvement. The bank doesn’t direct the work, but a timely recommendation can nudge the borrower in a better direction. 

Overcoming resistance: Borrowers often resist hiring outside help. Common refrains: “We’ve been through this before,” or “Our accountant can handle it.” But banks can push past those objections by focusing on the payoff. Consultants help quantify risk, identify quick wins, and calm internal chaos. They also help the borrower communicate better with all stakeholders—including the bank. 

Matching matters: Not every consultant fits every business. The article urges banks to curate a list of vetted firms based on size, industry, and cost. The wrong match can stall progress—and erode value. 

The bank’s benefit: Banks get better insights, cleaner financials, and reduced servicing strain. Consultants often surface new lending opportunities, too. In one case, a borrower became eligible for an asset-based loan structure that unlocked working capital and reduced risk. 

Bottom line: Done right, a turnaround engagement is a win-win. It helps borrowers stabilize and grow—and helps banks protect and strengthen the relationship. As the authors put it, even if the work is carried at a loss, it’s often a wise investment in long-term value.