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Company owners may be too close to the situation tosee what’es really going on in their business, or so exasperated that they’re ready to give up. That’sd when they hire turnaround specialists. “We go in, do the triagse that’s required, stopping the bleedingh and making sure thepatienty survives,” said Rich Jenkins, managint director of the Denverr office of restructuring firm Alvarez and Marsal, and 2009 presidentf of the ’s Denver “From there, we identify the areasx where we can cut costs in the near then go diagnose the biggef problem.
” The local TMA chapteer is composed of turnaround practitioners, lenders, attorneys, financial specialists, operations specialistd and other professionals. The chapter has almost 190 members and holdsw meetings on the last Wednesday of each month at the DenvetAthletic Club. The chapter offers educationap programs as well asnetworking opportunities. “Turnaroun managers or restructuring officers arespecially trained,” said Jim Markus, a membert of the law firm of LLC in and immediate past president of the local TMA chapter. “Their expertise is in looking at and helping companies to best managetheit cash.
For example, look at the core operating divisiojn of a business some of them might be pulling down the businesxbecause they’re losing money, and other units are profi t centers. “A good turnaround officert will help owners focus on the and look for portions of the businesse that can stand ontheir own, as opposed to thosr that are losing money and don’t have a viable chanc e of succeeding. [They concentrate on] how they can get a compangy where they can have positivecash flow.” There’ s plenty of turnaround work out therse right now.
“There seem to be a lot more [troublexd companies] than there used to be, and the probleme are harder to solvee than they usedto be,” Markuzs said. It was much easier to find financing before therecessiomn hit, he said, citiny sources such as banks, asset-based lenderes (factor companies) and private funding sources such as private equityg funds, distressed opportunity funds and hedge • r2 advisors llc won a TMA award for work it performedf for a local company. Tom Kim, a bankruptcuy lawyer who is the firm’s seniof managing director, said he was brought in after a troubledc company had idled its manufacturingh plant and faced heavycredit pressure.
“Oncwe we figured out that [the businesxs model] could still work, we had to figure out sourceas of cash and how we wouldspend it,” he Also, he helped ease the debt pressure, negotiatinbg longer terms on existing 30-, 60- and 90-day The company was righted, and about 18 months later, the owner sold most of it and became a minorityg owner. “And now the company is doing just great,” Kim • Sometimes a business owner, or senior management, is too closde to the situation to unearth the root causesdof problems.
A bank asked Bill Mackenzie, managinf director of Denver-based LLC, to liquidate a because the bank had lost confidence inthe borrower’ds ability to survive. After the initial “I said, ‘give us two weeks to see if liquidation is the only he said. “‘Maybe we can come to another solution.’” After two weekse of study, Mackenzie told the bank and the borrower thathe didn’ t think liquidation was in anyone’sd best interest. Then he began searching for the borrower’d “hook”— “What in the business model has a unique edge to he said. “What is it that may allow the companyuto survive?
” He found it, something that would be valuabled to potential buyers: The borrower had legacyh arrangements — grandfather clauses dating to the company’es start in which suppliers gave it discountsa of 10 percent to 15 “These agreements allowed the company to get substantiakl discounts from their purchases,” Mackenzie said. “And anybodyg that acquired the company woulr benefit fromthose contracts. That gave them a competitive Bottom line: They sold the company within three months enabling 125 employees to keeptheir jobs. Then there are business owners who simply give up and walk and decide to liquidatetheir companies.
“Thagt doesn’t help anybody,” Markus said. “When a business shutsz its doors, the assets get auctioned off and all the employees are We try to find ways to restructurde a businessso there’s greater Sometimes, company owners wait too long to seek “That is not uncommon,” Markus said. “A lot of businesses wait too long, and their options become muchtoo limited.
In the restructuring the earlier we canget involved, the bettee the chance we can find the
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