Articles
Behind the Apparent Commercial Real Estate Recovery: A Look at Chicago’s Middle Market
Until this year, the “extend and pretend” policies of lenders and special servicers created a dearth of transaction activity in the CRE market. However, a new trend emerged this year with banks more actively disposing of notes and REO properties, initiating foreclosures and appointing receivers. Banks are proactively dealing with properties that have languished over the last several years and now require active management. This is a positive sign for the market; we are dealing with the challenges and have begun the process of hitting the “reset” button.
Cooperating to Cope: Arizona’s New Real Estate Market Status Quo and How to Survive it
It’s been nearly five years since the housing market began its decline and two years since the recession was officially declared a thing of the past. In many parts of the country, real estate markets are well on their way to recovery. Arizona, however, is not one of them. For those in the Grand Canyon State, a long wait still lies ahead. To survive that wait, business tenants, landlords and lenders will have to embrace the spirit of cooperation, working together to make it through.
Bring Your Golf Clubs: Using Emotional Intelligence in Distressed Assignments
Research has consistently shown that successful leaders are distinguished less by their IQ and more by their EQ, that is, their emotional intelligence. While emotional intelligence is important for all types of leadership, it is particularly critical when uncertainty is high and time is limited—in other words, in precisely the circumstances faced everyday by turnaround and restructuring professionals.
The Line is Dead: The Future of Telephone, Cable and Wireless Communications
Back in the day, irritated parents once asked, “Do you have stock in the phone company?” when their teenagers talked for hours on their household landlines. Now, as teenagers and their parents both rely on cell phones and computers instead of landlines to communicate, individuals who really do hold stock in wired telecommunications (“telecom”) carriers need to brace themselves for the industry’s rapid and permanent decline.
Business as Usual: No Way to Run a Company
In nature, in life and in business there is no such thing as a permanent status quo—with time, things either get better…or they get worse. You evolve and adapt to change, or you find yourself or your business falling behind. No matter what happens, sticking to a “business as usual” mentality is a clear path from prosperity to survival mode.
Turnaround specialist hired for Nevada real estate fund
MorrisAnderson Managing Director, David Bagley appointed president and chairman of the board of Desert Capital.
The Art of Managing Vendor Negotiations & Communications in a Turnaround
For nearly four years, businesses have had to cope with a recessionary economy and tight credit markets. The businesses that have prevailed (or at least survived) often had to become crafty in their approach; they almost had no choice but to develop new models for operations. This is particularly true in the middle-market space, where competition is fierce and options for financing have been reduced or, in some cases, eliminated. In this environment of economic uncertainty, a company ignoring phone calls from angry suppliers and stretching trade credit is a tell-tale sign of distress. Although this approach may find temporary relief for management, it only delays the inevitable. Eventually every company in this situation will need to face reality head-on with its key stakeholder: the supplier base.
Where is the Family Owned Business?
In 1969, Simon & Garfunkel asked, “Where have you gone, Joe DiMaggio, our nation turns its lonely eyes to you.” 50 years later, we need to ask the same question of the family-owned business. The family-owned business has been the backbone of the American Dream and Economy as entrepreneurs entered into businesses with low barriers, utilizing ambition and diligence to help those businesses grow and prosper.
Warning: Telecom Landside Zone
For most people, it is no surprise that the wired telecommunications industry is shrinking. The surprise is how completely and how quickly the industry will disappear. Revenue has been dropping at an annual rate of 7.5 percent since 2006, according to IBISWorld, and it is expected to continue falling at a similar rate over the next five years. By 2016, IBISWorld predicts, the industry will be 31.3 percent smaller, in terms of revenue, than it is today.
The Regulators Are Coming
The stirring of Mass. Gen. Law Ch. 93 began from the data breach at TJX (TJ MAXX) in 2005, when 97 million personal records of customers were stolen with the use of computers. The scope of the Massachusetts regulation is broader than any other existing federal or state law to date; it requires public disclosure of a data security breach and provides for the implementation of security freezes to prevent further intrusion. Furthermore, companies outside of Massachusetts cannot ignore the regulations, because their effect is national and international in scope, as they apply to all companies that are public, private, professional and not for profit, where ever located, that maintain personal information of a Massachusetts resident.
2011 Not a Rerun of 2010 for Corporate Restructuring Professionals
In 2011, the economy will continue to sputter and opportunities will abound for those in the turnaround industry, Turnaround Management Association (TMA) members predicted in a recent survey that was the basis of a TMA webinar, “2011 Industry and Economic Forecast - We Are Not Out of This Yet” in January. Asked whether the recession had reached its peak, TMA members answered similarly to the way they did in the 2010 forecast. Nearly one in five respondents said the worst of the economic crisis is yet to come, and an additional 19 percent said that while they expect improvement, it won’t happen until 2012 or later. Only 10 percent said that the first half of 2011 will bring improvement.
EBITDAR as a Financial Health Indicator for Franchises and Retailers
One trick marketers use to generate awareness or gain credibility is to define a market so narrowly that they can make a plausible claim that they are number one. Consider how many car dealerships claim superiority in a big suburban area. On a personal level, my wife and I often tell our three children that we are by far the best parents they will ever have. The financial measure of EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) follows this concept. Slice and dice the data conveniently enough, and any company can appear successful. Simply put, EBITDA means that a company is profitable before: Interest or principal paid to investors or lenders, meaning not having to pay for the capital required to start and operate the business; Taxes; Depreciation; and Amortization of debt or other value associated with the start up of the business or acquisitions used to grow the business. Therefore, from a slightly cynical standpoint, EBITDA means: the company is not earning enough to show a positive net income, but if properly defined, it can proclaim it is making money. EBITDA plays a critical role in evaluating businesses that are undergoing change, and is often used in mergers and acquisitions as an alternative for earnings before capital costs and income taxes. But is it always the best alternative measure of financial health?
