Cases increase for business turnaround specialists - Business First of Columbus:

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Company owners may be too clos to the situation tosee what’s reallh going on in their business, or so exasperated that they’re ready to give up. That’s when they hire turnaroune specialists. “We go in, do the triagse that’s required, stopping the bleeding and making sure thepatient survives,” said Rich managing director of the Denver office of restructurinfg firm Alvarez and Marsal, and 2009 presideny of the ’s Denver chapter. “Fronm there, we identify the areas where we can cut costs in thenear term, then go diagnose the bigger problem.
” The local TMA chapte r is composed of turnaround practitioners, lenders, attorneys, financial specialists, operations specialists and other professionals. The chapterd has almost 190 members and holds meetings on the last Wednesdauy of each month at the DenverAthletiv Club. The chapter offersx educational programs as well asnetworking “Turnaround managers or restructuring officers are specially trained,” said Jim a member of the law firm of LLC in and immediate past president of the locao TMA chapter.
“Their expertise is in lookinf at and helping companies to best manage their For example, look at the core operating divisiobn of a business — some of them might be pulling down the businesa because they’re losing money, and othert units are profit centers. “A good turnaround officerd will help owners focus on the and look for portions of the businesss that can stand ontheir own, as opposed to those that are losing money and don’t have a viabled chance of succeeding. [Theyy concentrate on] how they can get a companyy where they can have positivecash flow.” There’se plenty of turnaround work out thers right now.
“There seem to be a lot more [troubled than there used to be, and the problemxs are harder to solve than they used to Markus said. It was much easiert to find financing before therecessionn hit, he said, citing sourceas such as banks, asset-based lenders (factor and private funding sources such as privater equity funds, distressed opportunity funda and hedge funds. • r2 advisors llc won a TMA awardr for work it performed for alocalp company. Tom Kim, a bankruptcy lawyer who is the firm’sx senior managing director, said he was broughft in after a troubled company had idlerd its manufacturing plant and facedr heavycredit pressure.
“Once we figuredc out that [the business model] could stil l work, we had to figur out sources of cash and how we wouldspends it,” he said. Also, he helperd ease the debt negotiating longer terms onexisting 30-, 60- and 90-dayh arrangements. The company was righted, and about 18 months later, the owner sold most of it and becames aminority owner. “And now the company is doing just Kim said. • Sometimes a business or senior management, is too close to the situatiomn to unearth the root causesof problems.
A bank aske d Bill Mackenzie, managing directo of Denver-based LLC, to liquidats a company, because the bank had lost confidence inthe borrower’sa ability to survive. After the initiak meeting, “I said, ‘give us two weeks to see if liquidation is the only he said. “‘Maybe we can come to anothefr solution.’” After two weeks of study, Mackenzise told the bank and the borrower thathe didn’tr think liquidation was in anyone’s best interest. Then he begamn searching for the borrower’s “hook”— “What in the businesz model has a unique edgeto it?” he “What is it that may allow the companyh to survive?
” He found it, somethinhg that would be valuable to potential The borrower had legacy arrangementx — grandfather clauses dating to the company’s start in whicgh suppliers gave it discounts of 10 percenrt to 15 percent. “These agreementxs allowed the company to get substantial discountxs fromtheir purchases,” Mackenzie said. “And anybody that acquiredr the company would benefit fromthosr contracts. That gave them a competitives edge.
” Bottom line: They sold the company within threemonths — enablinbg 125 employees to keep their Then there are business ownersz who simply give up and walk and decide to liquidate their “That doesn’t help anybody,” Markus said. “When a business shutws its doors, the assets get auctioned off and all the employeesare fired. We try to find ways to restructurs a businessso there’s greater value.” company owners wait too long to seek help. “Thag is not uncommon,” Markus said. “A lot of times, businesses wait too and their options become muchtoo limited.
In the restructuring the earlier we canget involved, the better the chanc we can find the solution.”