Re-visualization brings a company back to life: in an extended case study, the president of a turnaround firm reconstructs the rescue of a failing software company and its eventual return to health.

• Author: Kibel, Harvey
• Position: Restructuring

It was as close to a near-death experience as a business can have. Local press and national trade publications were already covering Peregrine System Inc.'s demise. The company, a San Diego-based provider of consolidated asset and service management software solutions, found itself in quite a bind.

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When Kibel Green Inc.'s (KGI) on-site manager, Bruce. Conklin, surveyed the landscape in 2002, he, too, wondered whether trying to rescue the company would simply be like "rearranging chairs on the Titanic." And although this story has a happy, profitable ending, it does for only one reason: the company agreed to be "re-visualized."

Re-visualization's Key Questions

While it may sound oddly New Ageish for a business concept, "re-visualization" describes the process too well to dismiss it. Re-visualization centers around two questions:

* What is the company's current status?

* During the growth phase, was the company profitable at that same revenue level?

Over a 20-year growth spurt, Peregrine had grown to $500 million in revenues, and it took only a few years for it to plummet back down to $150 million. But, a company must look to its history for answers. On the way up, Peregrine was profitable at $150 million--which leads to the first step of revisualization: making the company profitable at $150 million on the way down. So, once we knew Peregrine's current annual revenues and knew the company was profitable at that level a number of years ago, we had established a starting point. The goal here is to create a picture of the organization once the business completes the "comprehensive mapping projects."

Facing the Grim Facts

Admittedly, it wasn't always easy to see much beyond organizing an orderly liquidation. Every turn presented a more daunting obstacle. However, Gary Greenfield, the CEO, and Conklin recognized they faced a formidable task:

* Poor odds, considering that never before had a public software technology company of this size emerged from bankruptcy as a public company.

* Recent resignations of the CEO, CFO and other top financial executives, amid controversy involving the company's unraveling.

* Revenues declining from a peak of over $500 million to approximately $150 million.

* Cash depletion by early July 2002, even though KGI had just been engaged a month before.

* An SEC investigation regarding the handling of reciprocal transactions.

* Three changes in outside auditors, from Arthur Andersen to KPMG to...