Turnarounds and Crisis Management
Our turnaround and crisis management practice offers critical independent assistance for company’s in financial stress and those with under-performing assets. With working capital generation often being the key immediate need, we work with management to implement comprehensive cash management measurement tools. Our involvement as a Company advisor often provides interested third parties such as lenders and vendors with assurance that the necessary steps are being taken to maximize short-term cash generation and longer-term financial objectives.
Exogenous factors, changes in the competitive landscape and changes in economic conditions can cause companies to rapidly find themselves in a financial crisis. This is particularly true with highly leveraged companies. Our partners have a wealth of experience advising company management on ways to best manage through a crisis that may require skills existing management may not have had to employ in the past. We can assist with management of 13-week cash flow forecasts, vendor negotiations, and we can provide assistance in helping lenders understand the positive steps being taken. We can be the “second set of eyes” needed to provide assurance to relevant stakeholders that management is taken appropriate steps to successfully manage to the other side of the crisis.
Practice Leader- John Luttrell
John Luttrell has spent his management career primarily as CFO of small market capitalization, public companies with sales ranging between $50 million to $6 billion. Much of his experience relates to companies with significant inventories and capital investments, with both public and bank debt. He has extensive experience dealing with the various constituencies including public investors, lenders and government agencies. John’s areas of expertise include balance sheet management issues, including cash flow crisis management, inventory optimization, fixed asset utilization assessment and lender negotiations both on originating loans and loans with compliance violations. With prior operating management experience, John also has an expertise in rapid implementation of performance improvement measures.
Who We Serve
Fortunately, many successful financial managers have never found themselves in a financial crisis. Companies with underperforming assets or deteriorating cash flows will face a host of issues they may have never encountered before, including tighter management of cash flows, the need to extend vendor financing, and dealing with lenders that have lost their patience or faith in management’s ability to deal with the crisis. The added burdens of increased reporting to “at risk” constituencies can often be more than current management can handle. We have the experience and the horsepower to provide needed management assistance in these tough situations.
We can provide the necessary oversight and reporting to the Company’s lenders and other investors to provide an objective review of the Company’s business plan. Oftentimes, management may have a lender imposed monitoring mechanism as a condition to obtaining a loan waiver. We can review cash conservation plans and projected 13-week cash flows and we can monitor actual performance against these plans. We can also perform a risk and opportunity review of business and operating plans and we can assist with negotiation of forbearance agreements and restructuring plans.
- Provide interim crisis management to help guide companies facing financial challenges. We supplement financial management in order to enhance communications with creditors, vendors and the Board of Directors and, as important, we provide dedicated experienced resources to assure successful execution of turnaround plans.
- Fill an interim CFO position where the incumbent has lost credibility with lenders and other creditors. It can be near impossible to “fix” a creditor issue where the incumbent CFO is viewed as part of the problem. Alternatively, where warranted, we can help reestablish credibility of financial management through our independent review process.
- Establish or enhance 13-week cash flow modeling techniques and measure to actual performance.
- Analytical reviews and development of business plans.
- Comparison of operating plans to financial plans for consistency. Communicating required financial objectives to operating personnel.
- Analysis of cash conservation opportunities and assessment of any related risks.
- Model proposed debt compliance measures and provide sensitivity analyses. Assist in lender negotiations for amendments and forbearance agreements.
- Identify potential new sources of financing and refinancing. Assist in preparation of financial marketing packages.
- Coordinate lender operational and collateral audits.
- Monitor performance against business plans.
Successful Client Engagements
- Established 13 week cash flow models to support lender requests, with daily, weekly and monthly reporting to actual for companies with debt financing ranging in size from $5 million to $60 million.
- Negotiated multiple loan agreement amendments with both bank and non-bank lenders with loan commitments ranging in size from $5 million to $150 million.
- Negotiated numerous loan covenant waivers and resets and forbearance agreements for loans in non-compliance. Oftentimes clients find third party involvement is invaluable in maximizing covenant flexibility.
- We have extensive experience in developing support for bank audits.
- We have assisted smaller companies in liquidating plans for assets on non-complying loans in wind-down situations.
- We have analyzed financial forecasts and performed opportunity and risk analyses for management and lenders. Third party business plan reviews are often required by lenders in turnaround situations.
- We have extensive experience negotiating revised vendor and service provider payment terms and are able to quickly realize the maximum flexibility a vendor can provide.
- We have ample experience in quickly identify cost cutting measures including elimination of excess capacity, cancelation of unwanted lease arrangements and elimination of other unneeded corporate services and products.
- We have performed working capital reviews to assure quick collection and conversion of short term assets and maximum vendor/ supplier financing.
Jack – It’s truly been a pleasure working with you. You’ve been a stabilizing force for Day One Baby and I’m going to miss your candor and collaboration.
Sean Welsch, National Sales Director, Managed Markets, Medela, LLC
Jack – thank you so much for the big effort that you have put in the company the past six months. It was a great help for us that you were able to step in and save us in the critical situation we came in when Nancy left. We are thankful for the work you did on the finance and accounting side of the business, as well as the work put in to organize and form the teams when they were left all by themselves.