In our third annual Turnaround Manger Survey, senior members of the turnaround community were asked a series of questions that elicited responses on staffing, new business opportunities (U.S. and international), industry sectors, insights on the lender side, plus feedback on greatest concerns and the outlook for 2013.
Firms with fewer than 20 full-time turnaround professionals represented 71.4% of the total respondents with the balance, or 28.6%, encompassing firms with 21 FTEs or more — firms with 75 or more staff members accounted for 12.2% of the total. In response to the question on expected staffing levels at year-end 2012, 28.6% said “higher” versus 22.4% that responded “lower” — 49% said “about the same” as last year. As an interesting aside, in 2011 only 8.2% of the respondents said their intentions were to reduce staff versus this year’s much higher 22.4% — an indication of some planned shrinkage in professional staffing levels.
The survey respondents were asked to provide insight into their plans to expand their practices internationally. The large majority, or 69.4%, said no, while 6.1% said yes, plus an additional 18.4% noted “already global, but planning to expand.” An indication of interest was shown by the small number, or 6%, said, “not applicable to my firm,” versus over 14.3% that echoed a similar sentiment one year ago.
Using industry sectors as a basis, we asked the participants to tell us which sectors would likely provide the most significant number of opportunities through 2013. Manufacturing and retail scored highest, by far, at 63.6% and 59.1%, respectively, followed by housing/homebuilding (29.5%), hospitality-related (27.3%), municipalities (27.3%), media-related (22.7%), financial services (22.7%) and auto-related (4.5%). As an aside, the survey participants were given the opportunity to input “other.” When we tallied the “write-in votes,” the healthcare sector was identified as a segment that would provide new business opportunities — registering a 13.6% share of the total.
Expectations for 2013 were more positive than we expected with almost 41% of the participants saying they expected to see “more opportunities, versus only 14.3%, that said, “fewer.” The balance, or 45%, characterized their 2013 expectations as being “about the same.”
Using a regional grid to determine most likely geographic regions of the U.S. to provide the opportunity to mine for new business, the Northeast, Midwest and Southeast, collectively, accounted for almost 80% of the total responses. The Northeast scored highest at 30%, followed by the Midwest and Southeast at 26% and 23%, respectively. On the flip side, the West, Southwest and Rocky Mountain/Great Plains regions represented, in descending order, 10%, 9% and 2%, respectively.
Regarding our survey participants’ concerns for the industry going forward, majorities of over 59% and 53% said the “reluctance of lenders to call defaults” and “economic uncertainty” were at the top of their list, respectively. Fewer respondents noted an “abundance of liquidity” (27%) as a concern, while others noted a “dearth of filings” as a concern (18%).
On a related note, one of the factors discussed in the article in this issue authored by Thomas Osmun and Joseph Mazzotti of AlixPartners entitled: “With Fewer Opportunities and Lower Utilization — What Comes Next in Restructuring?” the writers discuss the adverse impact that “amend and extend” activity is having on restructuring opportunities despite the fact they often do not fix either the underlying capital structure or operating issues in a substantial or permanent way.
Euro Crisis/2013 Expectations
Not surprisingly, almost 80% of the respondents said they believed that the fallout from the euro crisis could affect U.S. industry and the lending markets. Of the remaining 20%, only 8% said “no,” with the balance, or 12%, saying “not sure.”
About the Survey
The ABF Journal’s annual Turnaround Manager Survey was forwarded to approximately 300 senior members of the turnaround management community. This year’s questions were focused on professional staffing levels, industry sector sensitivities, new business opportunities by geographic region, turnaround scenario types, lender sensitivity, greatest concerns and, new this year, commentary on the fallout from the euro crisis and expectations for 2013. As a footnote, several of the questions provided the opportunity to select “all that apply” (i.e., in some cases the response counts were substantially higher than the actual number of respondents).