Your Loan has Been Assigned to Special Assets...What Now?
• Develop a plan.
Determine if the core business is viable, and if it is, what the company’s position will be in three months, in six months, and in a year. If the business is salvageable, either on a standalone basis or through a sale or other restructuring, figure out what it will take to first stabilize the business, and then how to get to the goal. The bank will want to see a plan of action that is expressed in written narrative form and supported by financial statements and projections that show that the company has a clear path forward and will be able to meet its obligations.
• Hire competent advisors.
Bankruptcy is the backdrop against which you are playing, so hire experienced bankruptcy counsel. Do not rely on the attorney who served you and the company well for years, preparing family wills, handling the purchase of real estate and other transactional matters. If it becomes necessary to file for bankruptcy protection, or if the bank or other creditors force the company into involuntary bankruptcy, you will want to be prepared, understand your options, and know your responsibilities.
A bankruptcy specialist will often also be experienced with out-of-court restructuring and other options that are often less costly and more effective. The presence of bankruptcy counsel can be very helpful in your negotiations with the bank to obtain a waiver, forbearance or recast of the loan agreement.
Most lenders prefer that the company is prepared and properly represented, and they will respect your decision to engage knowledgeable advisors. In any case, don’t “go to a gunfight with a knife”—get professional advice from an attorney who knows the field on which you will be playing.
If your issue is primarily manufacturing inefficiency, consider engaging a firm that is expert in the processes your firm uses. If you are losing customers or reprinting jobs due to quality issues, consider hiring a consultant who can guide your company to achieve the International Digital Enterprise Alliance G7 Master certification, or other programs such as Lean manufacturing, Six Sigma and ISO certification. All these programs will force your company to establish better standards and procedures, and then measure the company’s results against these standards.
Mark Hahn is a managing director and founder of Graphic Arts Advisors, a boutique strategic financial advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing services, brand management, and related graphic communications industries. With more than 35 years of graphic communications experience in the areas of finance, operations, sales, M&A, and general management, Hahn has served as chief financial officer, chief operating officer and other senior positions with several commercial printing companies, as well as founding and eventually selling his own printing company.
The firm assists company owners and management, as well as their lenders, investors and shareholders in the following areas: mergers and acquisitions, sale of business, strategic and financial advisory, capital structure and funding, financial analysis, interim and turnaround C-level management, business valuations and serving as consulting experts. Hahn is the author of The Target Report and is regularly published and quoted in printing industry trade and management journals.
Mark Hahn can be reached at (973) 588-7399 or email@example.com