DOUBLE DOWN OR CUT YOUR LOSSES?
When a business consistently falls short of plan, investors face a difficult decision: commit more capital, give management more time, or change course. Owners and lenders bring in specialists, change management or add capital, yet performance continues to disappoint.
Management knows the business intimately; industry specialists understand the market; and financial advisers understand the capital structure. Each sees the situation through a particular frame of reference, yet the causes of underperformance may lie outside those frames.
Even experienced investors face powerful obstacles to objective judgment:
Commitment to the original thesis. Underperformance is explained away as temporary, cyclical
or the result of external factors.
Blind spots in risk assessment. Attention remains focused on the risks identified at acquisition,
while new and unexpected threats go underexamined.
Confidence in insider knowledge. The business is considered too complex for outsiders to
understand quickly or without disrupting management.
Reliance on familiar expertise. More industry specialists are brought in, often reinforcing the
same assumptions rather than challenging them.
These are not necessarily failures of competence. They are human traits and are predictable
consequences of being deeply invested in a business, its management and its original strategy.
AN INDEPENDENT PERSPECTIVE BEFORE THE NEXT COMMITMENT.
NMC brings a different frame of reference. Drawing on experience across 50+ industries, strategy, operations, investing and complex transactions, we look beyond the original investment thesis and conventional industry assumptions.
We identify what has changed, what has been missed, and where value can still be created. We then develop a practical plan to capture that value and, where appropriate, work alongside management to implement it. The result is a clearer basis for deciding whether to reinvest, restructure, reposition or exit.
THE COST OF WAITING
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Illustrative, not historical data. Earlier independent assessment can preserve options; distress-led restructuring often begins after substantial value has been lost.
WHEN TO CALL
Private equity owners/Private Owners/Corporations: Before committing additional equity, extending the investment horizon or approving another recovery plan.
Private credit lenders: Before amendments, waivers, forbearance or additional advances. Understand whether the proposed recovery plan addresses the causes of underperformance.
Banks: Before amendments, extensions, additional credit or acceptance of a restructuring proposal. Establish what the business can realistically support while options remain available.
Where a conventional sale is unlikely to work, NMC can also develop a tailored exit, including a
management buyout or buy-in.
See SELL: Tailored Exits.
EXAMPLES
Major motion picture company
Led the review and transformation of one of the world’s largest
television and film production operations, spanning 26 business units and up to 10,000 employees. Delivered $27M in cost and efficiency improvements and $123M from strategic repricing. The business moved from a $5M loss to a $146M profit within 24 months.
Financial services and membership organization
With nearly $600M of debt, the business needed $45M of additional profit to recapitalize its bonds. Management had identified $23M. Within six months, we delivered another $10.5M and began implementing a further $15M. Recapitalized within nine months.
15+ transformations
More than $550M in incremental profit, representing over $5BN in implied enterprise value uplift.
[Discuss an independent assessment]