October 2013

4th Annual Turnaround Managers’ Survey: Despite Concerns About Lender Behavior, Turnaround Managers Generally Upbeat

In this year’s Turnaround Managers’ Survey, respondents provided a sense of their collective outlook for the coming year with optimism showing up in new opportunity forecasts and a domestic boost anticipated as a result of emerging European economies.



In this year’s Turnaround Managers’ Survey, senior members of the turnaround community provided a sense of their collective outlook for the coming year with optimism showing up in new opportunity forecasts supported by growth in staffing levels and a domestic boost that is anticipated as a result of the emergence of many of the economies in Europe.

On the negative side, a significant percentage of respondents indicated concerns around the lender community, which could be euphemistically characterized as a love/hate relationship. In a stark departure from last year’s results, a substantially higher percentage of respondents noted they anticipate “fewer opportunities” from these sources compared to a year ago.

Expectations for 2014

Looking ahead, almost half, or more than 48%, of turnaround managers said they expect to see more opportunities in 2014 compared to last year’s 41%. Thirty-two percent said they are planning to increase staffing levels with a corresponding 17% indicating “decrease” — more than five percentage points lower than last year’s more than 22%. The balance, or 52%, indicated staffing levels would “remain the same.”

On a global basis, more than 31% of turnaround managers said they are either expanding an existing presence outside the U.S. (22%) or planning to launch an international initiative. And, on a related note, almost 54% of our survey respondents indicated that the seeming rebound of the European economy will be a plus for U.S. industry and the lending markets.

Concerns

With regard to our survey participants’ concerns for the industry going forward, the largest majority, by far, or 54% said “reluctance of lenders to call defaults” was at the top of their list. The “abundance of liquidity” and “dearth of filings” ranked second and third, respectively, at 37% and 32%, followed by “slowness of economic recovery” and “bank regulatory constraints” fourth and a distant fifth at 18.5%, respectively.

Other negative indications worth noting included the insights provided on the impact of potential opportunities sourced from the lender community. This year’s respondents indicated a substantial drop in this traditional source of new business compared to a year ago with almost 41% saying “less” compared to 22% that said “less” a year earlier. The change seems to result from a shift in response counts from the “about the same” category in 2012 to “fewer” in this most recent survey.

About the Survey

The ABF Journal Annual Turnaround Managers’ Survey was forwarded to about 350 senior members of the turnaround management community — data shown is based on a 15% response rate. This year’s questions were focused on professional staffing levels, industry sector and lender sensitivities, new business opportunities, turnaround scenario types, global indicators and, new this year, indicative referral sources. And as a footnote, several of the questions provided the respondents the opportunity to select “all that apply,” i.e., in several cases response counts were higher than the actual number participants.