Event Explores Turnaround Ideas for Tight Times
A panel of top corporate-transformation and investment experts explored opportunities and strategies for turning around troubled and underperforming companies at the inaugural public event of the new Center for Finance Strategy Innovation at the UT Dallas School of Management.
The panel discussion, “Turnarounds, Restructurings and Distressed Investing,” offered keen insights on critical business issues in these unprecedented economic times, said center director David Springate.
The UT Dallas finance professor, who is also the former president of the local Financial Executives International chapter, moderated the Nov. 3 discussion with Harry Gray, a UT Dallas lecturer and co-founder of the specialty turnaround firm Verto Partners, LLC.
The event was especially timely because “the financial crisis is here and everyone needs ideas for helping businesses make the best use of scarce capital in moving through challenging times,” Springate said.
Panel participants offered varied perspectives on the topics including corporate performance and governance, business turnarounds and restructurings and access to business capital.
About 200 attended the discussion and networking event, drawn by the caliber of panel members, who have advised governments and top global companies, led successful turnarounds of companies of all sizes and helped giant corporations improve their financial performance.
With the troubled economic times, many companies have handled daunting financial issues by restructuring, a trend likely to continue through late 2010 or 2011, said panelist Michael Bruder of Macquarie Group Ltd. Although companies with good credit have been able to refinance their debt, others have had to sell assets or restructure out of court to avoid the expensive prospect of bankruptcy.
“November will be an interesting time,” Bruder said. “The capital and equity markets are coming back, which gives us broader tools to solve the problems.”
Meanwhile, opportunities abound.
“It’s a perilous but opportunistic time” for those who want to buy distressed businesses, said panelist Conner Searcy of Insight Equity. “There is great opportunity for private equity firms to profit during the downturn.”
In this decline, when faced with economic bad news, companies have been quick to take radical action to cut costs, said Jay Lucas, whose firm advises private equity investors. Although there has been very limited deal activity for much of 2009, activity picked up around Labor Day, Lucas said. It was spurred, he said, by lower company valuations that drew the interest of private equity firms with money to deploy “now that the world did not end.”
Companies suitable for a turnaround often have a viable core business, a financial bridge that provides time to solve the problems, and capable management able to redeploy assets from marginal operations, said Verto Partners’ Donald Bibeault.
Dr. David Springate, director of the new Center for Finance Strategy Innovation, was one of the moderators of the panel discussion.
The Center for Finance Strategy Innovation
The gathering was the first large public event for the Center for Finance Strategy Innovation, founded in 2008 to focus on education and research programs in areas crucial to today’s economy. This includes serving as a resource to those in the wider community who develop and pursue innovative new methods of securing and using capital.
Working with businesses, the center helps companies address situations involving corporate transformations, restructurings, turnarounds and leveraged buyouts, as well as funding for innovation, project finance and growth capital. It also has active programs centered on public-private partnerships.
Donald B. Bibeault, West Coast co-founder of Verto Partners and author of Corporate Turnaround: How Managers Turn Losers into Winners! (Beard Books, 2nd ed., 1998). He received the first lifetime achievement award for corporate turnarounds from the Turnaround Management Association.
Jay Lucas, managing partner of Boston-based The Lucas Group and a former partner at global consulting firm Bain & Co.
Michael Bruder, managing director of investment banking at Macquarie Group Ltd. and head of the Australia-based company’s New York restructuring advisory and special situations practice.
Conner Searcy, partner at Southlake, Texas-based Insight Equity, a private equity firm investing in underperforming middle-market companies. The firm focuses on complex turnarounds of companies with $500 million to $1.5 billion in assets..