Last night I made the trek from Austin to San Antonio for the meeting of the Central Texas Chapter of the Turnaround Management Association. The company where I work as the director of business development, vcfo, consults with businesses of all sizes with a variety of issues around operational accounting, finance, HR and recruiting issues - thus TMA is an organization I wanted to know more about. vcfo can serve as a vital resource for distressed companies looking for options, as our CFO's are all highly seasoned executives who have hands-on experience with issues facing businesses in transition. Thus, extending my personal network with those who focus on "turnarounds" is ideal.
The speaker for the meeting was Cliff Atherton, managing director from the Houston based investment bank GulfStar Group. His talk was titled "The Challenges For Middle Market Transactions in 2009", and he did a great job of detailing the ups and downs that companies face in the coming year.
I enjoyed the presentation and all the conversations with the other professionals in attendance. My head was left spinning from talk about the economy, but this is an important topic for everyone, regardless of what we do for a living.
While Texas is just beginning to feel the changes that have impacted the rest of the country caused by the panic that hit all the markets in October, we are not immune from the crisis.
M&A has shut down due to the limited amount of credit in the marketplace. Banks continue to preserve capital and are not making many new loans. Bankers are not being aggressive and debt is more expensive. As we enter the new year following Q4 2008, we are seeing fewer transactions and the lack of available money, coupled with the drop in the stock market values; placing both buyers and sellers onto the sidelines. Many do not believe we have yet to see the bottom, and that does not help companies that are currently looking for options to raise cash.
Not long ago it was a sellers market, but the abrupt shift in the past few months have left few options for businesses that need to sell. Owners are holding onto the "anchor" of their 2007 valuations, and those that do not need to sell (companies with little debt and plenty of cash on hand) are not looking to make any moves until prices rebound.
The good news is that there are strategic buyers / investors out there who are looking to invest. Companies need to be realistic and flexible. We also need consumer confidence to return, as the general public is a major factor in the overall economy. As as long as people are not spending, there will not be a rebound in other sectors.
I left the meeting with an upbeat feeling about the future for the economy. While there is still some tough times ahead, everyone seemed confident. The investment bankers and others in the room are looking for deals, and that is a good sign.
My 94-year-old dad has seen a lot of things transpire in the economy over his lifetime. He told me recently that there was one fact about an economic "bust". They have all been followed by a "boom" at some point.
I look forward to attending future TMA meetings in San Antonio and Austin. It is a good organization with some great people involved.
Have A Great Day.