{"id":1008542,"date":"2020-08-20T20:44:06","date_gmt":"2020-08-20T20:44:06","guid":{"rendered":"https:\/\/america.guide\/?p=1008542"},"modified":"2020-08-20T20:44:06","modified_gmt":"2020-08-20T20:44:06","slug":"business-turnaround-expert-cites-keys-to-a-covid-19-comeback","status":"publish","type":"post","link":"https:\/\/thisamericandream.com\/business-turnaround-expert-cites-keys-to-a-covid-19-comeback\/","title":{"rendered":"Business Turnaround Expert Cites Keys to a COVID-19 Comeback"},"content":{"rendered":"\n

The September 11th attacks. The Great Recession. The COVID-19 pandemic.

All three of these seismic and tragic events have resulted in heartbreak to humanity, including loss of life and our emotional well-being\u2014both individually and collectively. Of course, accompanying these global crises were monetary meltdowns reminiscent of the Great Depression that commenced in 1929 and lingered until the late 1930s.

After a \u201crelatively\u201d calm 70 years, the United States economy has suffered three devastating developments inside the last two decades, alone. There have been wars fought throughout the world and inflation escalations along the way, to be sure, but the start to the 21st century has suffered escalating and unusually concentrated economic calamities\u2014some that have profoundly altered the very fabric of our lives, both personally and professionally.

Indeed, on the business front, such periods have been among the most\u2014perhaps the unequivocal most\u2014trying of times. Amid current circumstances as the coronavirus rages on around the globe, I recently connected with internationally-renowned business restructuring executive James \u201cJim\u201d Martin, founder of ACM Capital Partners<\/a> with offices in Charlotte, Denver and Miami. Having spent the last three decades leading international middle-market companies through periods of distress and transition to actualize stability and growth, Martin is uniquely well-positioned to share insights on how business can rally to best assure a \u201cCOVID comeback.\u201d Here\u2019s what he had to say.

MK: First, before addressing the current coronavirus situation, what can you tell us about how you\u2019ve helped companies navigate previous \u201crough waters\u201d?

<\/strong>JM: <\/strong>Relative to the September 11th attacks back in 2001, I\u2019ll share a representative example of a strategic pivot that didn\u2019t just help a company survive, but actually drove profit. After that horrendous event, I stepped in to assist a large aviation maintenance repair-and-overhaul facility whose revenue had been cut fully in half immediately following the attacks\u2014the result of many carriers permanently parking older aircraft (including the 727 fleet). The sizable challenge presented was to maintain a 1000-person labor force while allowing the industry the necessary time to recover. To do so, we created a captive subcontracting company to which we transferred one-third of our labor force. During our troughs, we contracted this labor to our competitors and, during peak periods, we utilized this labor for ourselves. Thus, not only were we able to retain our skilled, well-oriented labor force during the recovery, but that very staff actually provided additional, supplemental profit. The end result was that we sold the business for $138 million, which provided our new investors with a 33 percent internal rate of return (IRR).

Less than a decade after 9\/11, amid The Great Recession in 2008, I entered another industry that proved to be among the most brutalized by a global economic downturn: automotive supply. My client was a key supplier to the \u201cBig 3\u201d U.S. auto manufacturers.

At the start of 2008, the industry forecast was the production of 18 million vehicles in North America. Come summer, however, it was clear the automakers would not come near reaching that forecast due to the financial crisis. This did not come as a complete surprise to us, though, because\u2014amid our firm\u2019s protocols\u2014we had had already fully immersed ourselves in our client\u2019s industry and employed forecasting tools alerting us of trends … this one in the wrong direction. So, we were privy to the situation well before management and others within the industry. By late June 2008, we instituted cost-cutting maneuvers and furloughs that enabled the company to withstand the industry\u2019s brutal second half of \u201908 that would result in two of the \u201cBig 3\u201d automakers filing for Chapter 11. Despite the industry producing less than half\u2014as much as eight million\u2014of its original vehicle-production forecast, our client not only survived, but ultimately grew and prospered.

MK: Turning attentions to COVID-19, what do you feel is integral for businesses to survive and recover?

<\/strong>JM:<\/strong> For businesses to recover from the coronavirus shutdown, it\u2019s going to take a two-pronged approach: both financial and<\/em> human capital. Starting with the financial, it will be a \u201cloan-ly\u201d world for those not well-versed in the intricacies of SBA, PPP and other \u201ceconomic disaster\u201d lending. Consider how expeditiously those programs were rolled out. Then consider how even more quickly they were scooped up. Did anyone really read those loan documents in full, or even halfway through, initially\u2014or even to this day?

My guess is at least half of the companies receiving COVID-related loans took a very \u201cCliffsNotes\u201d approach to these agreements. The result is there\u2019s a solid chance funds were used incorrectly, which is going to make a lot of the loans, shall we say, less \u201cforgivable.\u201d For example, if your company\u2019s payroll roster is shorter today than it was pre-virus, the portion of the loans forgiven is likely to be less.

And while your mind may rush to claiming ignorance and throwing yourself upon the mercy of the government to which you already pay taxes, realize that third-party capital is likely to participate in this market through securitization.  This means that thousands of SBA loans could be bought, then packaged to be sold to the secondary market, at a discounted rate, no less.  If this happens, understand that the purchasers will have the full intention of holding their borrowers (i.e. small business owners) to paying back 100 cents on the dollar.  

So, those companies who received loans and are required, but unable, to pay them back in full may be exposed to either foreclosure or, worse, a \u201cloan to own\u201d scenario. In other words, much like the agreement that comes with your big-tech user agreements, like those prompting users to \u201cclick agree,<\/em>\u201d the fine print matters.

What this means to recovery is that, once again, cash is king: gather it; preserve it; cease lines of credit; liquidate what you can; negotiate costs down with suppliers. And if your company had a healthy bottom line pre-COVID, than a professional familiar with these trenches can help you look to refinance or bring in equity.

With all of that said, the key to a COVID-19 recovery is going to be adhering to the rules of a lender\u2019s road, as well as the ability to navigate the red tape when you veer off that road. If you have read all the fine print and properly managed your loan, congratulations! You\u2019ve acquired some really cheap capital. For those who didn\u2019t do their research, however, this road to recovery likely will need some paving.

MK: What about the human capital you mentioned?

<\/strong>JM:<\/strong> Yes, and then we arrive at the human<\/em> capital. Lots of companies today are excessively top-heavy. Remember the part about removing emotions from this process? Companies that quickly<\/em> recognize cuts need to be made will be better positioned to recover than those who dawdle. Again, compiling and preserving cash is going to best position a business for recovery.

This is an instance where it\u2019s especially beneficial to know when to pull triggers (best if earlier than others) and to make decisions that are not based on emotions\u2014a tall order for many CEOs, which is why many turn to turnaround experts. However it\u2019s undertaken, what\u2019s certain is that reducing human capital is painful, but it is also often necessary and almost always beneficial.

The upside is that, when the virus no longer exits, businesses can already be well-positioned for a fairly quick recovery. Maybe not v-shaped sans a vaccine, but quick relatively speaking due to the downturn having been so<\/em> specific to one singular causing factor.

MK: Tell us a bit about your role as\u2014and general value of\u2014a turnaround expert when turmoil strikes a business.

<\/strong>JM:<\/strong> During times of difficulty, owners and executives can greatly benefit from specialized knowledge that\u2019ll help them best navigate those unchartered waters that are often entangled in a lot of red tape. So, turnaround experts bring to the table a litany of tried-and-true \u201cbeen there, weathered that\u201d experience and expertise. There\u2019s simply no substitute for engaging with a partner whose entire mandate is ensuring your company\u2019s survival and success during some of the most grim and challenging times it might experience\u2014those professionals who are willing to spend sleepless nights figuring out how to ensure the company meets payroll; who\u2019ll work around the clock to keep the company\u2019s doors open; and who can tackle challenges without being hindered by emotions that understandably weigh on a business owner or manager. It takes this kind of specialized expertise, experience and grit to lead companies through periods of distress and transition, to stability and growth.

No stranger to corporate chaos, during Martin\u2019s own three decades as a globally-regarded turnaround expert, he has reportedly created and restored nearly $1.5 billion in value to lower middle-market companies; raised an additional $1 billion in capital; and managed mergers and acquisitions in excess of $500 million\u2014all collectively representing his company restructuring portfolio valuation in excess of $3 billion.

Today, as the coronavirus continues to wreak havoc on business operations far and wide, take heed that there are various key strategic and creative tactics that can help businesses not only weather the storm, but even emerge stronger and more financially secure on the other side.

~~~

<\/em>Forbes Business Council Member Merilee Kern, MBA is an internationally-regarded brand analyst, strategist and futurist<\/em> who reports on noteworthy industry change makers, movers, shakers and innovators across all B2B and B2C categories. This includes field experts and thought leaders, brands, products, services, destinations and events. Merilee is Founder, <\/em>Executive Editor and Producer of \u201cThe Luxe List\u201d as well as Host of the nationally-syndicated \u201c<\/em>Savvy Living<\/em><\/a>\u201d<\/em> TV show. As a prolific business and consumer trends, lifestyle and leisure industry voice of authority and tastemaker, she keeps her finger on the pulse of the marketplace in search of new and innovative must-haves and exemplary experiences at all price points, from the affordable to the extreme\u2014also delving into the minds behind the brands. Her work reaches multi-millions worldwide via broadcast TV (her own shows and copious others on which she appears) as well as a myriad of print and online publications. Connect with her at <\/em>www.TheLuxeList.com<\/em><\/a>and <\/em>www.SavvyLiving.tv<\/em><\/a>\/ Instagram <\/em>www.Instagram.com\/LuxeListReports<\/em><\/a>  \/ Twitter <\/em>www.Twitter.com\/LuxeListReports<\/em><\/a> \/ Facebook <\/em>www.Facebook.com\/LuxeListReports<\/em><\/a>\/ LinkedIN <\/em>www.LinkedIn.com\/in\/MerileeKern<\/em><\/a>.<\/em><\/p>\n\n\n\n

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