Prepare Your Next Transaction: Refinancing. Restructuring. Rebuilding.

By Stephan Millard, Product Marketing

Being prepared for a restructuring transaction in today’s economy makes sound business sense.  That was one of the conclusions of the panel discussion Datasite held on our June 17^th Webinar “Prepare Your Transaction: Refinancing. Restructuring. Rebuilding.”  Moderated by myself, Stephan Millard, we had three experts on restructuring provide advice on how to assess your current circumstance, how to pick the best strategies for your business and what you can do today to be prepared for restructuring. 

Today is a Uniquely Challenging Time

The global economy is not like any we have seen in recent times.  The corona virus pandemic has had a major impact on economies around the world.  In the US, business bankruptcies are up by 48 percent in the US in May and many companies around the globe in segments like retail, hospitality and others are struggling.  All of our panelists and over nine in ten (93%) of the respondents on the webinar said they expect the need for restructuring transactions to increase in the next 12 months.

Get a Handle on Where You Are

The first thing companies need to do is assess their current circumstance.  How?  All agreed - find advisors that know restructuring and who have been in the trenches doing the hard work with companies around the world.  Don’t try to go it alone.

What next?

• Anchor to reality.  Andrew Grimstone – Partner with Deloitte -  highlights the importance of starting this journey by having a clear view of where the business is today.
• Understand what options are available. Joseph Weisglass – MD with Configure Partners - describes what goes into strategic alternatives assessment; outlining both the standard options, such refinancing, and the more bespoke strategy(s) some will require.
• Determine if the company is solvent.  Tal Unrad – Partner with Arent Fox -  discusses the need to understand if the company is solvent and how this will effect the options available. 

How to Pick the Right Strategy 

Success picking the right strategy, as Joseph Weisglass described, can be a like a football game.  A good advisor is like a good quarterback. They have a range of plays at the ready from conservative plays to the ‘hail mary’ play.  Your advisors know what play to call because they are thinking about the other teams on the field and how they will react.

It is also important to know how many teams are on the field, as Tal Unrad pointed out.  As companies become less solvent, they may also have the creditors on the field. This can change the nature of how the play will work and which plays are available. 

Most of All: Be Prepared

Preparation is about taking the initiative, being proactive and driving to your preferred outcome.

What can you do now?  Andrew Grimstone offers some sound take aways: 

• First, decide what is core to your business model going foreword; then put everything else is on the table to solve the problem.
• Second, don’t be too proud.  Look at what your peers and other companies have done in similar situations. Take the best ideas. 
• Third, find good advisors who will help you think out of the box. 
• Finally, communicate with all your stakeholders up front and often.