Pivot Points Newsletter: June 2022

6/8/2022 Updates from CohnReznick's Restructuring and Dispute Resolution team

Receive and explore monthly insights from our Restructuring & Dispute Resolution team

Why so many M&A transactions fail and how not to be one of them

Research shows that as many as 90% of M&A transactions fail – they either don’t live up to their investment thesis or they flat out destroy shareholder value. However, by avoiding common pitfalls and implementing performance improvement strategies, it’s possible to be in the small minority and extract full value from a transaction.

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Q&A: Performance improvements strategies for long-term value

While implementing performance improvement strategies can provide a number of benefits to companies, it doesn’t come without challenges. In this Q&A, Cynthia Romano, Global Director of CohnReznick’s Restructuring and Dispute Resolution practice, goes into detail on which phases of improvement are most challenging, the benefits companies can achieve, and more.

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Sporting Goods Manufacturer

Background: Fourth-generation, family-owned, sporting goods manufacturer with approximately $150 million in revenue had to manage through volatile market cycles in order to control costs and manage inventory levels.

Our role: Performance improvement consultant

Results: Client was provided with a comprehensive roadmap to reduce year-over-year SG&A spend by $2.4 million (10.3%). We also reduced E&O inventory by more than $5 million over the first six months.

Beverage Distributor

Background: Third-generation, family-owned, beverage distributor with about $300 million in revenue had to manage through turmoil after leveraging the business to acquire a competitor.

Our role: Performance improvement consultant

Results: Increased EBITDA by 75% and created a 200% increase in equity value.

Improved cash flow by $650,000 during the first quarter and maintained a 10% improvement to weekly cash flow through improved collections
Reduced inventory investment by 10% and dilution by $700,000 on rising sales
Realized more than $1.3M in warehouse and delivery cost savings despite increasing volume.

Congratulations to Chris Creger who was recently selected for this year’s Secured Finance Network’s 40 Under 40 Award. SFNet's 40 Under 40 Awards, established in 2016, celebrate the achievements of young professionals in the secured finance industry — leaders who exemplify true excellence in their careers and who also contribute to their communities and the industry.

Congratulations to Kevin Clancy who has been named the new Chairman of the Nexia TRI (Turnaround Restructuring and Insolvency) Group. Formed in 2012, The Nexia TRI Business Group is represented by a 39-member team of specialists from across the globe with experience working in multiple industries/sectors and countries. As chair of the group, Clancy will lead a team that provides expertise to member firms and their clients in areas such as turnaround and restructuring, cross-border insolvency, investigations, and profit improvement.

2022 TMA Mid-Atlantic Regional Symposium (Jun. 8-9) – Attending

AIRA AC22 Conference (Jun. 8-11) – Attending/Panelist

SFNet Women in Secured Finance Conference (Jun. 15-16) – Attending

TMA Florida Renew, Rebuild and Realize (Jun. 16) – Attending

TMA Connecticut 15th Annual Golf Outing (Jun. 21) – Attending

TMA NextGen Leadership Conference (Jul. 14-15) – Attending

ABI Northeast Bankruptcy Conference & Consumer Forum (Jul. 14-17) – Attending

SFA SFVegas 2022 (Jul. 17-20) – Attending

NYIC/TMA New York City/TMA New Jersey Super Networking Party (Jul. 28) – Attending

ABI Mid-Atlantic Bankruptcy Workshop (Aug. 4-6) – Attending

TMA Southeast Regional Conference (Aug. 22-24) – Attending

Real Estate, Texas. Debra Morgan has joined the firm as a Managing Director and is based in our Houston office. She specializes in real estate transactions, portfolio management, recapitalizations, and the restructuring, repositioning and disposition of over-leveraged real estate and distressed debt.

Performance Improvement, New Jersey. John Macrae has rejoined the firm as Managing Director and is based in New Jersey. He has 25 years of experience in executive management and performance improvement with a focus on leading and transforming growth-oriented businesses across multiple industries.

Offshore Alternative Energy Company

Our role: Advise client on raising debt financing for a construction loan on a new production facility and for initial working capital.

Structured Finance

Our role: Provide expert witness services in connection with RMBS litigation regarding the commercial understanding and application of certain representations and warranties.

Financial Institution

Our role: Assist lender in performing a forensic investigation of their real estate related collateral.

Healthcare Company

Our role: Assist a large health system assess viability of, and identify integration and growth possibilities for, a distressed acquisition target.

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_{This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.}