Joseph D’Angelo is a busy man these days. A partner at Carl Marks Advisors specializing in turnarounds and restructuring, with expertise in the energy sector, D’Angelo says oil prices have given him lots of work of late.
“In both the services side and now more on the [exploration and production] side, we got started two years ago working on companies that overexpanded,” he said. “With the lower price of oil, it’s pretty much made every company look overleveraged.”
Compounding the problem is pressure on the banks to reduce their exposure to oil and gas.
“For those PE firms that were very disciplined when oil was at $100, they stand to be snatching up assets at depressed prices,” D’Angelo said. “If it’s an E&P company and the oil is in the ground, we all know that oil’s going to be worth more one day. We just don’t know when.”
Meanwhile, many firms are hurting as companies go into bankruptcy and equity gets flushed. “Where PE firms would look to get us involved is sooner in the process rather than later, so that maybe we can save the equity value,” D’Angelo explains.
As “boots-on-the-ground turnaround guys,” D’Angelo says, he and his colleagues help companies “consider operational restructuring as much as financial restructuring because a lot of the path forward is going to be self-help. Where can you make some changes so you’re less reliant on your lenders?”
A dual role
Carl Marks Advisors plays a dual role as a consulting firm as well as an investment bank. “You just need one adviser to fulfill the company’s needs, whether it goes to a court process or out of court,” he said.
D’Angelo added that his company is also able to advise firms looking to make investments in distressed debt, “a loan-to-own kind of strategy.”
With respect to his firm’s curious name, D’Angelo explains that Carl Marks founded the first international securities trading firm, “back when trades were all done by phone and on a blackboard.” This historical irony gave Carl Marks Advisors its informal motto: “We’re capitalists since 1920.”
“It’s a family office,” D’Angelo says. “We don’t go with an acronym because people don’t forget it. And because we’re a people business. You’re going to have one of us as a partner, connected to you at the hip, working through your office.”
Photo courtesy of Carl Marks Advisors