Is the Turnaround Industry Really This Weak?

At the TMA Annual meeting last week In Washington DC, I found a nearly universal sentiment that the case flow and deal flow in the industry was still perilously weak. Just a sampling of the quotes that I collected:

  • “Case load is down significantly, we are currently involved in a pitch process that is actually deploying a reverse [fee] auction between us and a competitor on already discounted rates. Thank God that we have a diversified business.” Managing Director from a Large TM and Financial Consulting Firm
  • “We are actually very busy” [The catch is that we parted ways with more than ½ of our professionals over the past 2 years]. – Practice Leader from a Mid-size Middle Market TM Firm
  • “Our turnaround business is very slow; we are only staying busy by focusing on non-turnaround cases with “teaser rates” on business assessments.” Managing Partner from a Small TM Consulting Firm (10 professionals)
  • “We occasionally still get good cases, but we also often go for months without any work.” Founding Partner – Boutique TM Firm – 3 Professionals
  • “We simply cannot find any borrowers. Since we will not compromise on our rates we simply are not lending.” – Principle of a NE Distressed Lender
  • “We formerly had “hundreds” of lawyers in our bankruptcy practice – we have let go or re-assigned almost ½ of the lawyers in my group because of the lack of work over the last few years.” Managing Partner from a Major NE Law Firm
  • “We are not at all busy and any firm that tells you that they are is lying.” – Managing Partner from a Mid-sized, NE Law Firm
  • “We have cut our billing rates by over 50% and we still cannot generate enough work to keep us busy.” – Managing Director from the Turnaround Practice of one of the “Big 4” Accounting firms

While this was the consensus opinion, there was much less of a consensus for: why the industry was still slow, what the root causes were, when things will change and what to do about the current state of affairs. For those interested, I will blog on those subjects in the next day or two.