Mackinac Partners Managing Director Nishant Machado talks to Finance Monthly about the current state of Turnaround and Restructuring business and current US processes
Finance Monthly Magazine- May 3, 2016
Nishant Machado is a Managing Director at Mackinac Partners and runs the West Coast restructuring practice for the firm. Nishant Machado has served in multiple c-level positions across industries, including Chief Restructuring Officer, CEO, CFO and COO. Nishant Machado was recently awarded the M&A Advisor 40 under 40 award for his body of work. Nishant Machado is Certified Insolvency and Restructuring Advisor and a member of YPO.
What more can you tell us about Mackinac Partners?
Mackinac Partners is a prominent restructuring and turnaround firm with offices in Austin, Dallas, Michigan and Los Angeles. Mackinac Partners has considerable experience in successfully turning around and restructuring complex situations in a variety of industries and provides clients with robust financial and operational expertise to help distressed companies create value.
Mackinac Partners is focused on servicing middle market companies and differentiates itself from other restructuring firms by providing their clients with both financial and operational expertise. We have highly skilled turnaround professionals that have a proven track record of creating enterprise value through carefully formulated turnaround strategies and balance sheet restructurings. Mackinac Partners’ professionals work with management teams to provide them with the dedicated resources to stabilize distressed companies and define a plan that fits with the stakeholder’s strategic plan.
What are some of the main causes that drive companies to seek turnaround and restructuring services?
In most situations companies find themselves seeking our services because they are burdened with an over-levered balance sheet or due to declining profitability, or both. In many instances the over-levered balance sheet is a result of declining operational performance and that is why Mackinac Partners’ ability to provide clients with a balance sheet and P&L solution is critical for long term sustainability and value. Being able to recapitalize the balance sheet and right size the debt relieves the company of a considerable burden but it doesn’t necessarily mean the company is out of the woods.
In order to ensure the company does not find itself in an over-levered/distressed situation again, it is imperative that the operational and strategic weaknesses are addressed. Mackinac Partners has worked with numerous clients to develop detailed turnaround plans that either fix existing operational issues or reposition the company to grow EBITDA and enhance value to its stakeholders. Mackinac Partners professionals have the skill set and expertise to focus on both top line growth and profitability.
What trends have you witnessed in your turnaround work recently?
Since the capital markets had been very accessible until recently (changing with the recent volatility) we have seen a larger focus on operational turnarounds than the traditional balance sheet/cost cutting restructurings. Companies in a number of key industries have had to adjust to meet the expectations of today’s consumer. Top line growth has suffered and companies have had to tighten up their cost structure to provide them with sufficient runway, while they adjust their sales strategy and fight for consumer dollars.
Does the economic climate affect your work heavily?
Absolutely. As the economic climate worsens consumers really buckle down and we’re already starting to see that. Couple that with tightened credit availability and companies are forced to explore all their alternatives to survive. That will result in both consensual and judicial restructurings.
What are the procedures for filing for insolvency in the US?
The procedure is fairly straightforward. Companies can file a voluntary chapter 11 or be forced into an involuntary filing. The process once a company is in bankruptcy can take several different paths – they can file a plan of reorganization, go through a 363 sale process or if there isn’t a viable go-forward business they can liquidate through a liquidating chapter 11 plan.
How does one rescue a failing business? Is it a case-by-case basis or are there any trends you follow?
It all depends on the situation. If it is more of a P&L turnaround it is on a case by case basis because we have to specifically identify the issues facing the business, understand the competitive market, define our turnaround strategy and then execute. The assessment of the problem and development of the strategy and the plan is different in each situation and it’s where we spend a good amount of time because it is critical that we get that right. Another big part of rescuing a failing business is building the executive team and providing them with the right direction, resources and systems to successfully execute the plan and continue to build on the stabilized platform. It is also very important to work with all the stakeholders to make sure they are aligned with the restructuring plan.