Corporate Restructuring: Gordian Group Partners Peter Kaufman and Henry Owsley have just published “Equity Holders Under Siege: Strategies and Tactics for Distressed Businesses“, Beard Books, 2014. The book offers practical advice and actionable strategies for entrepreneurs and other owners to reclaim their companies and extract value. The authors will soon release an update to their prior book, “Distressed Investment Banking: To the Abyss and Back,” published by Beard Books in 2005.
Old Equity under duress, seeking recovery – Excerpt from Book it: Best bets for board reading
Old Equity under duress, seeking recovery From Equity Holders Under Siege by Henry F. Owsley and Peter S. Kaufman. Copyright ©2014 by Beard Books. Published by Beard Books (www.beardbooks.com).
For any distressed company, going through a restructuring process is unpleasant. Layer on top of that a mission to extract value from a situation where other, more senior constituencies are being financially disappointed, and you are looking at a truly daunting process, one that is potentially expensive and offers no guarantee of success. So why would a rational Old Equity player undertake such an effort? The short answer is: for financial and other gain.
Old Equity may be a private equity fund seeking to achieve the highest possible portfolio returns in an increasingly competitive investment environment.
Or Old Equity may be the company’s founder, who has experienced setbacks and now faces the prospect of lenders selling the business out from under him. Or Old Equity may be the board of directors of a public company. The directors may have been with the company for years, and have longstanding relationships with key stockholder groups.
Regardless of the identity of Old Equity, these various incarnations share some basic similarities. They are motivated, they want a recovery for stockholders that may fall outside of the bounds of conventional recovery thinking, and they are willing to engage with creditors to achieve their aims. They may have differing abilities and access to financial wherewithal, but they have declared themselves players and are willing to throw their hat into the ring.
In short, whether or not they realize it, Old Equity is seeking options and optionality. It’s the role of an unconflicted, creative and zealous investment banker to provide these. So now Old Equity has the will. What is the way?
Henry F. Owsley is the founding partner and CEO of the New Yorkbased investment bank Gordian Group LLC. Peter S. Kaufman is Gordian Group’s president and head of its restructuring and distressed M&A practice (https://gordiangroup.com).