Navigating volatility and distress

There are ever-increasing signs that we are heading for an economic slowdown, and a number of sectors are experiencing rising levels of distress, driven to some extent by macroeconomic factors, but also by technology disruption, increasing global trade tensions and, in the case of the UK, the additional impact of Brexit.

The prevalence of cov-lite loans, and a very different mix of lenders now financing businesses, will directly impact how restructurings are developed and implemented. In addition, the spectre of technology disruption means that sorting out the financing will not necessarily be sufficient to fix the problem.

While stress has so far been limited to a few specific sectors, we are having an increasing number of conversations with clients, ranging from Fortune 500 to Private Equity, about preparing for a “softening”.

In this report we discuss the key points your clients should consider in order to be better prepared for a slowdown.
 

Key findings

A slowdown seems increasingly likely, now is the time to get prepared for a downturn by ensuring:

• You are prepared for different downturn scenarios
• Your operations are lean and flexible
• You have the right financing in place
• Your business strategy takes account of the rapid changes taking place in many industries
• You are ready to take advantage of any opportunities caused by competitor weakness

Restructurings will be different this time, and likely move at a much faster pace. Understanding the dynamics and key stakeholders will be critical.