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Practical Gloom Thinking
Lately, the economy has been keeping me awake at night. Over the last year our team has had conversations with hundreds of companies about the current financial uncertainty. In that time, many of the professionals in my own extended family have been unemployed at some point. Everyone asks us the same thing: Where is the economy headed?
I could give our team's analysis and short answers:
- The Great Recession is probably ending.
- Things still feel bad because of two things: high unemployment plus a sharp drop in household net worth.
- Indicators suggest a modest return to growth next year–we believe growth will be better than the consensus of US economists, but we're not out of the woods yet and growth will not be as strong as in prior recoveries.
- In some sectors things could get much worse before they get better.
Here are some of the bigger issues looming:
- Many companies have debt coming due between now and 2013.
- Many of these companies have too much leverage.
- We see this possibly leading to a big wave of bankruptcies.
- We could see another financial crisis like the one of 2008 in which banks stopped lending to each other because they didn't know which banks would fail next.
- Another wave of companies could be in trouble because their lenders are taken over by the FDIC and when they need to refinance their loans, they're no longer dealing with bankers but with regulators.
- Without the time, patience, or experience to work things out or find a new lender to restructure the loan schedule, regulators may find it more expedient to liquidate company assets and put people out of work rather than go to the trouble of a workout.
- All this could mean more companies failing, more people losing jobs, more people not able to afford rent, healthcare, food – not to mention discretionary purchases – and crush our economy.
This is where, together, we can help. If you know a company with debt coming due between now and 2013 or a company facing distress, tell us. At The Courtney Group, we like to roll up our sleeves and solve problems. We have the depth of experience, the relationships, the attitude and compassion to work with companies in distress.
Here's why:
(1) Our specialty is refinancing and raising capital - that's what we live and breathe. We urge companies with debt coming due in the next three years to investigate re-financing it now; rates are low and we see the possibility of tighter credit in the future. We have the relationships, knowledge and experience to accelerate raising the right capital from the right people for senior debt, subordinated debt, and equity.
(2) We have expanded our advisory team to meet the needs of companies facing distress, turnaround, or restructuring. Our team includes professionals with extensive bankruptcy, insolvency, restructuring and operations experience. If you are considering the sale of a division, working out a plan with lenders, refinancing a business or buying out a partner, contact us.
We call this "Practical Gloom Thinking". We're actively closing deals and are always interested in situations where can help you or someone you know. For more information about Practical Gloom Thinking and the projects we're working on, please visit our Press Room.
December, 2009
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