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  • When Your Business Can’t Repay A Bank Loan

    Effects are still being painfully felt by owners of middle-market companies.

    Upstart: Gamechangers

    A business turnaround adviser explains why small and midsize companies are having trouble servicing their debt and offers advice on defusing tough situations

    Business turnaround expert Jim Martin has had an insider’s view of the Great Recession as he works out loan repayment troubles between banks and middle-market companies still scrambling to recover. The founder and managing partner of ACM Capital Partners, a $3 million turnaround and financial restructuring company based in Miami, says he still sees market “softness” but is optimistic about increased availability of credit and private equity investment for small businesses. Martin, who has been in the corporate turnaround industry for more than two decades, spoke recently to Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.

    Karen E. Klein: You have seen a lot of declining companies in the past couple of years. Was lack of demand the biggest problem?

    Jim Martin: There was such a precipitous drop in the economy. It was the speed at which we saw this recession approach and take over, coupled with the banks’ own issues. And it was exacerbated by the runup of personal debt of the individuals who own companies. They either made huge personal investments in their businesses or they bought toys—Lear jets and yachts—when debt was cheap and aplenty.

    Has your business seen a boom during the recession?
    In ’08 and early ’09, our business was basically nonexistent, despite the fact that was the worst time. It was because people were scared to part with a dollar for anything. The Dow was down; we all thought the world was coming to an end.

    As people started to see the landscape a little clearer, they were willing to spend money on advisers like myself to help get through their issues. My business started to pick up during the second half of last year and now we have a whole slew of deal flow and activity, generated by both bankers and borrowers.

    What are you seeing on your clients’ balance sheets right now?
    The recession may be officially over, but its effects are still being painfully felt by owners of middle-market companies, their management, and lenders. I’m looking specifically at many companies in the construction industry in South Florida, where the experience of the recession has been particularly hard.

    But I’ve also got a client that is a last-mile trucking company who does a lot of retail business and we’re still seeing softness in his business. That’s exacerbated by fuel costs and balance sheets that are not cleaned up, both on the family side and the small business side.

    So, many companies are still suffering. We’re in April of 2011 and I’m seeing cases where the bank is asking us to liquidate retail locations that survived the worst of times. I don’t think we’re where many would think we are from a recovery standpoint.

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    Filed Under: Gamechangers


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