By Peter Elkin, Co-Founder and Partner, Pivot Group
For much of my career, I’ve stood shoulder to shoulder alongside leadership of companies during the most challenging moments in their lifecycles. Sometimes those moments are glaringly obvious, such as when the business has run out of cash and the walls are closing in. More often, though, distress begins quietly starting with small warning signs that are easy to overlook and even easier to rationalize.
What I’ve learned is that the single most important factor in determining whether a company finds its way back to stability is when it chooses to see these early warning signs and respond to them with the focused action and resources required to address the problem]. Timing shapes everything.
The Early Signals Are Always There
Corporate distress rarely announces itself with a single event. Instead, it builds slowly. Sales are slipping a bit. Liquidity is tighter than expected. Decisions take longer to make. Or maybe leadership becomes focused on putting out fires rather than looking ahead.
In many cases, these early signs are dismissed as temporary fluctuations. Leaders rationalize them as “just a soft quarter”. Rather than press management for better answers to hard questions, investors instead choose to rely on past performance as a reason not to act, and operational teams work around issues without escalating them rather than draw attention to themselves
But problems can compound quickly. A modest cash flow gap turns into delayed payments to suppliers. Suppliers tighten terms, production schedules slip due to supply chain issues, and customers begin to lose confidence. Lower revenue then compounds the pressure on tightening liquidity, accelerating the cycle.
I’ve been asked by many companies to assist with responding to this “flash-flood” phenomenon, and it’s remarkable how quickly a what appeared to be a short-term issue had become a full-scale organizational crisis. The warning signs were there all along. The real problem was the no one was willing to look closely enough, early enough, to respond.
Waiting Too Long Narrows the Path
Late-stage distress severely limits the options available. Many companies wait too long to acknowledge distress. By the time external advisors are brought in, the organization is in full crisis mode. Cash is constrained, stakeholder trust has eroded, and leadership is stuck playing defense.
Negotiations with creditors become more adversarial, operational fixes must be made under intense time pressure, and investors face distressed pricing and compressed timelines. Creating value is harder, costlier, and the pathway in which the enterprise operates is much narrower. The difference between early and late see problems and engage them effectively determines whether a company effectuates a real turnaround or simply manages the enterprise’s decline.
The Role of Culture in Spotting Trouble Early
Companies that consistently get ahead of distress share a cultural trait: they are honest with themselves. They have made self-awareness a core corporate value.
They invest in systems that surface signs of weakness or decline quickly through rigorous financial reporting and operational transparency. Their leadership teams are willing to have tough conversations among themselves and their team members before problems become unmanageable. They treat scenario planning and stress testing as ongoing disciplines rather than emergency measures.
This kind of culture doesn’t make a company immune to market shocks or strategic missteps, but it does make it far more resilient. As an investor or advisor, I pay close attention to these cultural markers. They’re often the clearest indicator of whether a business can weather a storm.
Why Outside Expertise Helps
Even the best leadership teams benefit from external perspectives during periods of distress. A fresh set of independent, experienced eyes can identify patterns that may not be obvious from inside the organization.
Turnaround professionals bring observational rigor and speed of response at a moment when internal bandwidth is stretched thin. An experienced advisor can help define and prioritize the right actions, coordinate responsive support – or at least patience – among important stakeholders, and establish actionable, critical paths that stabilize the business.
The earlier this kind of partnership starts, the better the outcomes. It’s not just about crisis response. It’s about creating space to think clearly and act strategically before options run out.
Distress Is Inevitable. Disaster Isn’t.
Every organization will encounter moments of strain—markets shift, leadership evolves, and strategies lose relevance. Distress itself is not a failure; the failure lies in waiting too long to confront it. Ultimately, timing defines outcomes. Leaders who act early preserve flexibility, protect value, and maintain control. Those who delay often find that their options—and time—have quietly disappeared.
