To be sure, taking an aggressive stance against already-aggravated creditors poses risks. But experience has taught that lenders have short memories, in part because the officers who made the bad loans don’t necessarily feel the pain of having to work them out, according to Henry F. Owsley, CEO of New York-based investment bank Gordian Group LLC. His firm is advising private equity firms or their portfolio companies in at least four troubled situations.
And the rewards of getting tough with lenders are compelling. In ordinary times, enduring a write-off or two in a large portfolio may not be such a big deal for a buyout shop. Not so today. In the aftermath of the Great Recession many firms have sustained hits across their portfolios. The viability of their firms could well hinge on how hard they fight for every scrap, even in situations they might have walked away from a few years ago. Said Peter S. Kaufman, president of the Gordian Group: “They’re more focused on their returns in this cycle, and a lot of them are a lot less willing than they used to be to leave shekels on the table.”