ARTICLE
13 September 2024

Managing Distressed Situations As An Investment Banker: A Conversation With Sandy Prabhakar (Podcast)

KM
Katten Muchin Rosenman LLP

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Katten is a firm of first choice for clients seeking sophisticated, high-value legal services globally. Our nationally and internationally recognized practices include corporate, financial markets and funds, insolvency and restructuring, intellectual property, litigation, real estate, structured finance and securitization, transactional tax planning, private credit and private wealth.
In the latest TMA Chicago Midwest Podcast episode, I sat down with Sandy Prabhakar, Managing Director at Armory. As an investment banker, Sandy has more than 20 years of experience advising clients...
Canada Corporate/Commercial Law

In the latest TMA Chicago Midwest Podcast episode, I sat down with Sandy Prabhakar, Managing Director at Armory. As an investment banker, Sandy has more than 20 years of experience advising clients on activities related to mergers and acquisitions (M&A), refinancing, restructuring and crisis management. Sandy has also been involved in the TMA Chicago Midwest Chapter for nearly 20 years, currently serving as the organization's current treasurer.

We kicked off the discussion by learning about Sandy's unique journey into the world of insolvency and restructuring, which began in commercial lending with GE Capital in Canada, where he developed a knack for handling distressed situations. His move to Chicago in 2001 marked the beginning of his deep dive into restructuring, first with Heller Financial and later with Deloitte and KPMG. This extensive background in managing distressed assets and advising on large bankruptcies shaped Sandy's approach to distressed M&A situations in his role today.

Sandy went on to highlight the importance of early involvement in distressed situations, which are often triggered by liquidity issues. He tells us that when he and his team are brought into such matters, they quickly assess the pain points and collaborate with the client's other advisors and legal counsel to implement swift solutions, whether it is through refinancing or sale processes. Sandy noted that distressed M&A processes are notably more compressed than traditional M&A processes, therefore requiring his team to run parallel processes, such as sale and refinancing, in order to maximize outcomes. He added that refinancing tends to be quicker due to less intensive due diligence compared to a sale, where buyers delve deeper into the business's intricacies.

Regardless of compressed timelines, Sandy emphasized that patience is key in maximizing any distressed M&A process and underscored the importance of understanding the business's enterprise value and potential recovery angles as well as aligning all stakeholders, especially in situations with lender fatigue or diverse bank groups. He acknowledged that certain situations, such as large litigations that involve critical unsecured creditors, might necessitate court proceedings.

Sandy also shared his insights on current market trends and his industry outlook against the backdrop of a pivotal election year. He explained that the past year has seen an increase in balance sheet stress, driven by higher interest rates and rising costs, and that regulatory changes have also impacted the landscape, coupled with less patience from regulators compared to the post-COVID era. Sandy said he anticipates continued distress in the market, particularly in the commercial real estate sector, over the next six to 12 months.

Finally, Sandy reflected on his long-term involvement with the TMA Chicago Midwest Chapter, which has been instrumental in his career and helped him build a robust network of professional colleagues and friends. He advocated for young professionals to invest in their networks early, emphasizing that those relationships will be valuable as they progress in their careers and search for new business.

Listen to the full episode below.

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