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The role of restructuring

Published: Oct 24, 2008

 Consulting       

One area of the consulting industry that's sure to see some action in this downturn is restructuring. Firms like AlixPartners, Kroll Zolfo Cooper, FTI Consulting and Navigant Consulting that provide interim management services, restructuring support and risk management and compliance are sure to see an upswing in demand for their services, as banks and other financial institutions turn to them for guidance.

Alvarez & Marsal, another turnaround and restructuring firm, has gotten a lot of face time recently, having been brought on to help salvagethe pile of rubble that is nowLehman Brothers. Bryan Marsal, the Marsal in Alvarez & Marsal, has stepped in as chief restructuring officer at Lehman. Over 140 A&M employees have been charged with sifting through a boatload of derivative trades, in addition to serving as the liaison between Lehman and its creditors.

A&M approaches fledgling banking institutions as it would any company facing high risk. Here, Stefaan Vansteenkiste, A&M's European managing director, discusses how crucial restructuring firms are right now to the success of the banking industry. He points out that, just like any other business, banks need manage their risk by looking at their internal operations and evaluating their liabilities and cost structure.

In an effort to gain another foothold in the market, A&M has just expanded its public sector practice, hoping to boost its stature among government entities struggling with budget constraints in the economic downturn.

Vansteenkiste makes a point of saying that what looks OK today may not look ok tomorrow - reminding companies that they will need A&M and its fellow restructuring buddies around to help pick up the pieces. This all assumes, though, that failing financial institutions will have the necessary funds to de-risk their business.

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