May 2015 Chapter Execs Mtg_GFine Presentv1

TURNAROUND MANAGEMENT ASSOCIATION

Greg Fine, CAETMA Global CEO

Chapter Executives MeetingMay 14, 2015

TMA members help company management navigate through an off-plan event or maximize the underlying value when the enterprise can’t be saved.

TMA members SAVE JOBS!

The Business Life Cycle

The Business Life Cycle

Early Stage Companies

The Business Life Cycle

Most Traditional Private Equity

The Business Life Cycle

Traditional Turnarounds

The Business Life Cycle

Fundamentally, a Turnaround is about bringing sustainability to an unstable or distressed business to: Retain investor/owner value Maintain jobs Protect creditor investment Create a stable, productive enterprise

WHAT IS A TURNAROUND?

Ineffective Management Over diversification Weak Financial Function Poor Lender Relationships Lack of Operating Controls Market Lag Explosive Growth Precarious Customer Base Operating Without a Business Plan

SIGNS OF TROUBLED BUSINESS

Stage One: Changing Management

Stage Two: Analyzing the Situation

Stage Three: Implementing an Emergency Action Plan

Stage Four: Restructuring the Business

Stage Five: Return to Normal

STAGES OF A TURNAROUND

One central tenant of turnarounds is the use of an independent manager, normally called a Chief Restructuring Officer (CRO) - variations include Chief Turnaround Officer/AdvisorRegarded as important for many reasons: Provides a direct reporting channel to the Board and creditor constituents

regarding the status of the restructuring effort Allows CEO/COO to focus on continuing business operations; they remain

involved in the restructuring but are allowed flexibility to focus on regular operations CRO provides an independent, objective assessment of the business’

fundamentals (such as operating margins) CRO provides experience with restructuring concepts and leads

development of restructuring plans

USE OF INDEPENDENT CRO

Traditional Lenders Alternative Finance Providers Investment Bankers Private Equity/Distressed Investors Restructuring Attorneys Liquidators/Auctioneers Everyone Else

THE OTHER PLAYERS

2009-2010 – Many distressed companies benefitted from “amend, extend, and pretend,” Only loans with the lowest quality were forced into workout Default rate for leveraged loans peaked in 2009 (10%)

2011-2012 – Credit markets opened up and many companies with marginal performance were able to refinanceGenerally speaking, large companies had more choices Default rate for leveraged loans dropped to more normal rates

by 2012 (2%)

GENERAL OBSERVATIONS AND TRENDS

2013 and beyond – Credit markets remain robust Fewer traditional large turnarounds Continued lower trending on commercial bankruptcies Money will chase quality Everyone still waiting for interest rate increase…the big “What If?” Growth outside TMA’s traditional North American market

GENERAL OBSERVATIONS AND TRENDS

Will there be a flood?

THE TMA MEMBERS

ARE WINNERS!!!!

As Association Professionals, it is our

RESPONSIBILITYto make sure the they feel that way

and that the world knows it!

The staff of the Turnaround Management Association is made up of highly talented, passionate, fire-breathing advocates of turnaround and corporate renewal professionals. They are so jazzed about what we are doing that people expect to see their picture next to the definition of “Association Professional” in Wikipedia. We are individuals who want to see TMA and its members grow and prosper.

TMA GLOBAL CULTURE STATEMENT

My first and primary responsibility is to create a culture where highly talented people want to come every day to do GREAT things!

CEO STATEMENT

A successful member is a satisfied and long-term member!

Does your chapter scream “WINNER?” Does your chapter leadership demonstrate “WINNER?” Are your chapter events “WINNER CLASS?” What are you doing to drive the success of the members at

your chapter?

YOU ARE NOT ALONE!