Cash is King — Credibility is the Crown When Dealing with Banks

Partner William Snyder, Director Jerry Cooper, and Manager Alex Pettee discuss managing credibility with stakeholders in the most recent installment of the Turnaround Management Association‘s Journal of Corporate Renewal.

In the last 20 years, turnaround professionals have assisted thousands of clients who were predominantly referred by stakeholders within the company who have money to lose. These stakeholders—such as shareholders, subordinated debt holders, or primary lenders—typically advise management to seek the services of restructuring professionals. The fulcrum of the capital structure that triggers the recommendation can vary depending on economic conditions. In recessions, lenders often make the referral, whereas shareholders typically do so in good times. Stakeholders want and need professionals with a deep restructuring background to support the management team, often in situations with a minimal margin for error.

The issue leading to the referral can range from simple missed forecasts, tripping a covenant, or a full-blown liquidity crisis. The risk to the business and the need for decisive action increase as the company enters this potential set of events. The addition of experienced professionals can provide support to the management team while assessing and creating options for stakeholders.

Read full article here at TMA Journal of Corporate Renewal.