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“Consider fully, act decisively.”

― Jigoro Kano

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A recent analysis indicates that private equity portfolio companies outperform their public peers in recovery from business distress, including bankruptcy.

This superior performance is found to be due not only to the superior alignment of incentives in private equity owned companies, but also the active involvement of the board of directors, which can be instrumental in resetting expectations and holding management accountable during a turnaround.

How Private Equity Owners Lean into Turnarounds

See full story in McKinsey Quarterly (here)

McKinsey Quarterly (@McKQuarterly)

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When U.S. retail behemoth Target set its sights on an aggressive expansion into Canada, there was every reason, at least initially, to believe that the company would be successful.

Bolstered by a strong and experienced management team, robust systems, and considerable financial heft, the company was poised to shake up the retail market in Canada.

The reality was one misstep after another, ending in a humiliating bankruptcy of the company’s Canada operations, and a multi-billion dollar loss.

The Last Days of Target

See full story in Canadian Business (here)

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Faced with sharply declining casino revenue and a lack of support from the state government of New Jersey, Atlantic City is mired in a financial nightmare with no clear path out.

Atlantic City Seeks a Road Out of Distress

See full story in Bloomberg (here)

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Verso Secures DIP Financing

Distressed paper company Verso recently negotiated a $600MM DIP financing package with Citibank as administrative agent.

The financing will allow the company to move ahead with a reorganization plan that would eliminate $2.4 billion in pre-petition debt.

See full story in ABF Journal (here)

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Troubled retailer Sports Authority, facing growing liquidity pressures, entered a 30-day grace period on January 15th as it works to secure lender support for a potential out-of-court restructuring.

The private equity backed company has badly underperformed competitor Dick’s Sporting Goods in recent years.

Sports Authority Working on Deal with Lenders

See full story in CFO (here)

• In his nearly 20 years as a change agent, David has served as an advisor, board member, interim manager, investor and operator at organizations ranging in size from pre-revenue startups to Fortune 500 organizations.

• David has several publications to his credit and is a regular speaker on the topics of change management, performance improvement, restructuring and turnaround.

• David received his MBA from the University of Chicago and completed his undergraduate studies at Fairleigh Dickinson University.

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David Johnson

Email: david@acm-partners.com

Ph: 312-505-7238

Twitter: @TurnaroundDavid