As Recession Slows Turnarounds Multiply, Restructuring Experts Say

CHICAGO, Oct. 14 - The recession may be winding down, but most turnaround professionals are handling more projects this year than last and expect that pace to hold through 2010.

More than sixty percent of 130 respondents to the Turnaround Management Association Trend Watch poll reported higher workloads and billings in 2009, and predicted revenues to be higher in 2010 than this year. About seven out of 10 thought so last year as the financial crisis spread.

A majority of those surveyed, 64 percent, said banks and asset-based lenders are sources for most engagements, but this year's leads also are coming more often from:

-- Accountants -- 18 percent, up from 10 percent
-- Peers -- 21 percent, up from 15 percent

-- Corporate clients, investors and others -- 12 percent, up from 8
percent


Like last year, most professionals said engagements typically involve manufacturing (65 percent), construction (43 percent) and distribution (42 percent). Most engagements involve distressed companies in late decline, according to 61 percent of respondents, but healthier companies also are seeking help:

-- Companies in early decline -- 16 percent, up from 12 percent

-- Companies in mid-decline -- 45 percent, up from 31 percent


The lack of financing available to distressed companies is propelling distressed business sales, especially those dictated by creditors who would lose the most if the company liquidates. As a result, buyers are selecting turnaround professionals for due diligence and negotiations work, respondents said.

Hampered by the unfavorable credit climate, most turnaround professionals are generally finding solutions for troubled businesses outside bankruptcy court. Only 41 percent said in-court reorganizations or liquidations occur most often, compared to 78 percent last year.

More than forty percent said firms increased staffing and employers paid most attention to prospective hires with prior turnaround experience (57 percent) followed by operational experience (43 percent). Of those pursuing advanced credentials, TMA's Certified Turnaround Professional (CTP) designation was preferred.

Another 15 percent saw decreased staffing at firms this year, slightly more than last year's 10 percent, and some attributed it to the economy.

With 9,000 members in 46 regional chapters, the Chicago-based Turnaround Management Association is a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, executive recruiters and consultants.