A Parable of Baseball and Banking: Only the Commish is different
As we spend time with stressed businessmen, the emerging single biggest concern
is not the economy, the sales & margin pressure or employees bolting. The 800
lb. gorilla - no, not Bobby Bonds, - is the banking/financing monster.
The first issue is “what happened to my years/decades long banking
relationship”? The real answer is that there never was a relationship; it was a
combination of good marketing by the lender and wishful thinking by the
borrower. At best, it was a one sided love affair. As long as financial
performance demonstrated progress and interest & principal were paid as
contracted, the lender’s relationship manager bought a periodic lunch and sang
lovely arias under the borrowers’ window, all in the name of insulating the bank
against the competition.
But as soon as performance went south, so did the lender, like a duck in winter.
The stream of “buts” began to sound like an outboard motor on steroids (oops,
sorry Manny, A-Rod, Roger, Mark et al). Furthermore, banking free agency and
subsequent deleveraging caused by the financial crisis they helped perpetuate,
exacerbated player/banker turnover to a dizzying rate. Even if there was the
illusion of a relationship, it crashed upon the rocks of an unending stream of
different relationship managers and credit personnel, so much as to leave the
fan (insert customer) merely rooting for the color of the uniform (insert
business card).
Once the shocking reality of “no real relationship” sets in, the borrower is now
unfettered by illusion and prepared to move on, free of the pain of unrequited
love.
Thus, the second issue is “now what”? With the hot breath of special asset
officers at the neck and the two strikes of covenant breaches and frightful
business conditions registered by the umpire, batters can either choke up on the
bat - lean out their operations - or go down swinging or looking, doesn’t matter
much how you strike out.
Leaning out the operation, adjusting the overheads and expectations for the long
haul is a critical maxim. The essential concurrent requirement is also to
momentarily step out of the batter’s box to consider the next pitch, both
location and type. That means organizing thoughts and addressing the stance
(insert telling the story). If the game had infinite length, one could aimlessly
scramble about, soliciting the opinions of an endless number of other players,
but the umpire (read economy/payroll) won’t afford that luxury. You need to get
into the box and hit, now!
Dartmouth has a wealth of experience (coaching) in aiding businesses and your
clients in arranging proper financing. We organize & tell the story, and do so
appropriate to the case lenders, not a megaphone from the dugout. We recognize
the lengthening funding cycle and keep the sense of urgency on everyone’s plate.
We’re not sure Commissioner Obama is doing any better with banking than
Commissioner Selig (who most certainly is inept) is doing with baseball. We know
one thing for certain however, you need to get on base with this at bat and get
on now. The next pitcher (recession) is no easier to hit than this one.
We hope that you enjoyed reading this and we would welcome any introductions to
companies and their legal, accounting or banking advisors where our deep
expertise in capital structuring, operating turnarounds and strategic business
development may be mutually beneficial.