As the economic upheaval continues to derail exits and IPO plans, private equity firms often need advice on operational strategies to ensure the health of their portfolio companies. That’s where James Loughlin, principal and managing director of Loughlin Meghji + Company, comes in.
Loughlin and his team help firms jump-start a turnaround, avert a bankruptcy filing or, if a filing can’t be avoided, help a portfolio company navigate through Chapter 11 to emerge stronger. Members of the firm can also step in as interim executives, serving as chief restructuring officers or in other temporary roles. “We work with a company’s management and usually send in a team of senior professionals who have experience with operational change and project management in the company’s specific industry,” Loughlin said. Within the firm, Partner Mo Meghji has had a lot of experience in commercial real estate finance; Kevin Shea has expertise in radio and TV broadcasting; Ken Simon has expertise in retail; and Tom Pernsteiner has significant experience in the automotive sector.
In 2009, LM+Co. had an advisory role in many highly visible bankruptcies and restructurings, including those of Capmark, Young Broadcasting, Journal Register, Sharper Image, Yellowstone Club, Masonite and Greatwide Logistics.
One of the most common problems Loughlin sees in portfolio companies stems from capital structures that assumed continuous revenue growth. “But because of the weak economy, most businesses are not growing the top line,” said Loughlin. Instead, revenues are down double-digits, which creates tremendous pressures on profitability. Management teams therefore must develop strategies to address overcapacity to right-size the organization, in addition to dealing with capital structure and debt capacity issues. “Sponsors need to stabilize the bottom lines of their portfolio companies at a time when there’s yet to be any clear evidence of a sustainable recovery for most industries,” said Loughlin.
Private equity firms, large and small, often refer LM+Co. to the management teams of their portfolio companies, “some of which are distressed, others doing okay but not great,” said Loughlin. Both mid-market shops and the largest private equity firms have investments that are under some kind of financial distress or just need to perform better. Many of these firms want to bring in a fresh set of eyes to look at ways to improve the overall profitability and cash flow of their portfolio companies. LM+Co. helps them with pricing and revenue enhancement; supply chain and distribution improvements; and customer and product segmentation analysis. “We are also finding more and more private equity clients are looking for outside help in financial restructuring,” said Loughlin, “and we can also provide that through our corporate finance group, led by a former JPMorgan investment banker, Charlie Smith.”
Loughlin has more than 25 years of financial and operational restructuring experience. He’s been an adviser to financially underperforming and distressed companies, lenders and other creditors, and corporate boards and equity sponsors, restructuring more than $50 billion of debt.
Loughlin and Meghji, both former Arthur Andersen restructuring partners, founded New York City-based LM+Co. in 2002.
Contact info:Phone: 212-340-8420