Blog Post

G2 Capital Advisors announced today that its client ITOCHU International Inc. (‘ITOCHU’ or the ‘Company) and its subsidiary Enprotech Corp has entered into a definitive agreement to acquire American Hydro, a Wärtsilä Corporation business.

American Hydro is a leading North American provider of custom hydropower refurbishment solutions and turbine services. The Company leverages world-class advanced engineering, precision machining, large fabrication, and field services capabilities to power North American hydroelectric production. 

Victoria Arrigoni, Managing Director & Head of Industrials and Manufacturing at G2 Capital Advisors commented “It has been an honor to be a part of expanding ITOCHU’s footprint in the hydropower and renewables market. The opportunity for ITOCHU to expand to the hydropower space is a pivotal moment for their machinery division’s go-to-market strategy.”

The addition of American Hydro to ITOCHU’s portfolio of businesses will expand industry segmentation into the renewable energy sector and position the organization to become a leading North American maintenance, repair, remanufacture and optimization solutions provider for heavy-industrial machinery and equipment.

The transaction is subject to regulatory approvals and is expected to close in the first half of calendar 2023. 

Primary Deal Contact:
Victoria Arrigoni
MD, Head of Industrials & Manufacturing
[email protected] 
Media Contact:
Jennifer Johnson
VP, Head of Marketing
[email protected]

Record-breaking post-Holiday sales masked a marked slowdown in overall retail spending. Despite Black Friday and Cyber Monday sales surpassing $20 billion for the first time in history, U.S. retail spending experienced its most significant decline of the year, suggesting households are making strategic financial decisions as they plan for the road ahead. The economy remains at an unprecedented crossroads, with many questions looming:

Will inflation continue to slow, and how much further could interest rates rise? The Fed continues to raise rates at a slightly slower pace and has signaled its intention to continue doing so at least through the spring.  

Will a slightly slowing economy morph into a full-blown recession, and will the labor market remain strong? While sales and margins show signs of softening, the labor market continues to defy expectations, making it hard for the Federal Reserve to further ease the policy. Layoffs in the technology, media and real estate industries make headlines. Still, they represent a minuscule portion of the labor force, with overall jobless claims falling by 20,000. 

How much longer will pandemic-era savings and easing supply chains buttress consumer spending, and will they continue to spend more on necessities? While personal savings soared to nearly $6.5 trillion in 2020, they’ve since dropped to below $500 billion, lower than the $1.4 trillion pre-pandemic. Despite supply chain imbalances driving discount sales as retailers looked to shed excess inventory, consumers are focusing their budgets on food and other staples and spending less on holiday categories such as electronics, clothing, and sporting goods. 

Ultimately, is a recession inevitable, and how bad might it get? This remains anyone’s prediction, but for business owners, management teams, and industry leaders, any level of uncertainty should be met head-on – waiting to seek clarity can be a losing move. 

Connect with G2 to discuss your 2023 strategic objectives. At G2 Capital Advisors, deep sector and operational expertise underscore our dedication to achieving success at all costs. We support clients through both healthy market cycles and times of distress, with a refusal to fail. We provide highly tailored advice to company-specific circumstances in an ever-changing world. Reach out today to start the conversation. 

Even with some softening in the capital markets and ongoing challenges of inflation, talent shortages, and supply issues, the current landscape continues to be a highly competitive market for acquirers to find, connect and purchase businesses.   Here are 10 best practices to increase the likelihood of success if you are attempting to build and execute a proprietary acquisition process

Stop searching for Goldilocks. The perfect company does not exist, so stop looking for it.  Buyers spend much time early in their search, looking for the ideal company.  All companies are a combination of interrelated attributes.  Each attribute should be ranked using repeatable and objective metrics.  For example, a simple “high to low” ranking concerning risk, fit with the company, upside opportunity, and overall adherence to acquisition criteria can be highly beneficial.   You rarely find an issue-free company; if you wait for one to come along, you may never acquire one. 

Don’t take on this effort alone.  Be honest about how much time you can dedicate, your level of deal experience, your knowledge of the marketplace, and the quality of your network.  Having a well-rounded team involved brings different perspectives and insights. The right team increases bandwidth to connect with targets and gather and review information while reducing the probability of missed information or deal bias.  

Marketplace relationships are great, but they do not guarantee a pipeline of deals. Your existing relationships can be a double edge sword.  Target companies may have a preconceived view of you, your team, your company, or your brand.  This bias may be due to an ill-fated interaction in the past, and as a result, you may never get a chance to talk to the target. Additionally, some targets may be unwilling to engage because they view you as a competitor.  Or there may be a concern that you are trying to gather market intel.  While having companies and people in your CRM is helpful, it will never replace continuously finding creative ways to connect with targets that fit your strategy. 

Be prepared to share.  Buyers often think Sellers are ready and willing to quickly share their company’s financial information, analysis, and secret sauce.  The reality is that most are not.  An effective way to get a Seller to open up is by sharing with them first.  Be ready to tell your story.  How did you get into the business?  Why do customers and employees choose you versus someone else?  What are your biggest challenges or concerns?  Sharing key high-level financial metrics: topline revenue, revenue mix, and growth is a sign that you are entering into this conversation as equals.  Remember that there are many Buyers out there.  What makes you unique?  Keep it succinct but make it personal.  You want to earn the Seller’s trust.  In the end, trust drives open dialogue about more sensitive information, which you will need to advance the conversation to valuation and structure. 

Be flexible; the journey is not linear.  The M&A journey is a rollercoaster of high activity and slow periods where you may go days, even weeks, without an actionable next step or exciting opportunity.  It is critical to remain positive, prescriptive, and patient.  Creating an unnecessary sense of urgency with a proprietary Seller is counterproductive. Very few Sellers dedicate time and resources to a sale effort, at least initially.  Sellers naturally keep discussions close to their chest to reduce the likelihood of employees discovering their plans. A Seller’s timeline is often misaligned with yours, but that does not mean they are not working towards the same goal.   During the pursuit of acquisitions, remember that statistically, it’s not a matter of “if” an owner will sell; it’s a matter of “when.”  Patience and persistence are critical.

Be transparent in how you approach valuing the business.  When you have gathered enough intel and information to have views on valuation and structure, share that with the Seller.  Transparency allows for open and objective dialogue about the risks and opportunities of the business. Through discussions and review of additional supporting materials, you will feel comfortable placing the right weight on a particular finding and how it impacts the structure or valuation.  Transparency increases the likelihood of agreeing on a mutually beneficial way to get a deal done, whether now or down the road. 

Motivations are only sometimes obvious.  While it can save time to jump to “what is it going to take to get the deal done,” it’s generally not wise to do so until you are ready.  This approach on the first phone call or face-to-face meeting can be off-putting to the target.  It may create a confrontational tone if it does not push the target away.  The motivations and emotions of the Seller are what drive the discussions.  These elements take time to reveal themselves.  Uncovering them requires attentive listening to the answers given in response to your questions.  Allow for the discussion and the relationship to evolve naturally. 

Reserve judgment of a Seller that lacks financial expertise.  You will encounter attractive businesses with wildly successful owners that cannot articulate their profitability, need to learn or understand GAAP (generally accepted accounting principles), and are materially off on the size and scale of the business.  You should be prepared to roll up your sleeves to understand how a target makes money.  It is common for owners of middle-market companies to operate based on cash in the bank and the size of their tax liability.  Their financial acumen and the quality of their financials will present themselves early in the relationship.  Encourage them to involve their accountant or someone else with a more robust handle on the numbers as early as possible. 

As the process unfolds, a Seller’s “number” may change.  Be prepared that the first honest feedback from the Seller comes when you tender your first offer – even if many of the terms have been discussed and verbally acknowledged.  Sharing the offer in writing formalizes and often recalibrates the process. This may be the first-time outside advisors (CPAs, Attorneys, Wealth Management Professionals, Intermediaries, Investment Bankers, or spouses) get involved.  These advisors often do not know you or your intentions and are unaware of the inherent or perceived risks and concerns discussed with the owner as you’ve developed your valuation and deal structure.  Many buyers gloss over those topics when sharing their advisors’ indication of interest (IOI) or letter of intent (LOI).   So, be ready to explain and defend your position objectively.  Also, be prepared for the resulting response or counteroffer to be significantly different from the discussions leading up to that point.  Listen to what the Seller says.  Know your walk-away number; if reached, do just that, and you will find another opportunity. 

Remember, buying a company is a marathon, not a sprint.  Accepting this will allow opportunities to develop and evolve at a natural pace. Treat everyone with respect, be open and honest in your feedback, and never forget it is not a matter of “if” an owner will sell; it is simply a matter of “when.”  

Rising Inflation Causing Consumer Pause

With the changing inflation rates, the U.S. still holds an optimistic outlook on global e-commerce, though some consumers may be more hesitant to engage in interactions. Ensuring proper customer experience and well-handled delivery procedures could go a long way in retaining shoppers in 2023.

Mastering the Retailer Supply Chain

Players like Amazon and Walmart have set a new standard for consumer’s expectation for same-day or next-day delivery. To respond, we’ve seen retailers enhancing their partnerships with, and even acquiring third-party logistics providers to get goods to consumers faster. Recent examples include American Eagle Outfitters’ acquisition of Quiet Logistics, Costco’s acquisition of Innovel Solutions, and Panasonic’s acquisition of Blue Yonder, a widely used warehouse and labor management platform. 

It’s no secret COVID-19 exploited vulnerability to global supply chain and manufacturing procedures. As many retailers felt the repercussions of this and know the outcome of another supply chain disruption, companies may start to diversify the location of suppliers to account for the unpredictability of this disruption. 

Our consumer & retail team has played a hand in acquisitions for retailers with recent engagements including:

Shift to e-commerce beyond just distribution

Brands that were traditionally offline continue to seek additions to bring them online as quickly as possible, and many of these partners are opportunistically acquiring brands themselves. The incredible growth in the eCommerce Aggregator space, driven both by traditional M&A activity and high-value VC investment, continues to dominate the headlines. Additionally, consumer companies continue to invest in areas like CRM and content marketing to extend the product experience and further influence consumers’ decision-making and online presence.

Consolidation focused on higher-order territories

Where M&A activity historically skewed toward product category or aisle consolidation has shifted into higher-order need-state territories and solutions. For example, owning the hand cream aisle has taken a back seat to owning a total care story, and owning healthy eating has been replaced by owning all of the lifestyle. Further consolidation is expected as many product categories and store aisles remain highly fragmented.

How to win in retail today? Be nimble and think broader

For consumer & retail companies, the ground is constantly shifting. Spiking and fickle consumer demand, supply chain snarls, inflation, and fast-evolving consumer preferences are reverberating throughout the industry. These shifts are affecting every aspect of a retailer’s business—from sales and marketing strategy to inventory and supply chain management.

What Are Consumers Looking For?

Consumers expect more from retail companies today. They demand an easy, efficient, and enjoyable experience above all else. They increasingly expect retailers to meet them exactly where they are, and to meet their expectations instantly, all while displaying a lower capacity for frustration.

“Retail is as real-time as it’s ever been. Pricing fluctuations, trip-driving behavior shifts, and demand for immediacy—especially given the normalization of same-day delivery and an endless aisle online—have forced everyone in retail to leave room in their long-term plans for adaptations and adjustments.”

– Brian Cohen, Managing Director & Head of Consumer & Retail, G2 Capital Advisors

Rather than temporary, pandemic-related changes that will revert back to normal, we believe these shifts have permanently altered the retail environment. 

Against this backdrop, it is critical for consumer & retail companies to embrace a more nimble and flexible strategy. Today, long-term plans are only as good as how often you revisit them. Management teams must continuously reassess their strategy and make adjustments based on the prevailing market conditions.

Questions Retailers Should Be Thinking About

  • Will inflation continue to slow, and how much further could interest rates rise? 
    • The Fed continues to raise rates at a slightly slower pace and has signaled its intention to continue doing so at least through the spring.  
  • Will a slightly slowing economy morph into a full-blown recession, and will the labor market remain strong? 
    • While sales and margins show signs of softening, the labor market continues to defy expectations, making it hard for the Federal Reserve to further ease the policy. Layoffs in the technology, media and real estate industries make headlines. Still, they represent a minuscule portion of the labor force, with overall jobless claims falling by 20,000. 
  • How much longer will pandemic-era savings and easing supply chains buttress consumer spending, and will they continue to spend more on necessities
    • While personal savings soared to nearly $6.5 trillion in 2020, they’ve since dropped to below $500 billion, lower than the $1.4 trillion pre-pandemic. Despite supply chain imbalances driving discount sales as retailers looked to shed excess inventory, consumers are focusing their budgets on food and other staples and spending less on holiday categories such as electronics, clothing, and sporting goods. 
  • Ultimately, is a recession inevitable, and how bad might it get? 
    • This remains anyone’s prediction, but for business owners, management teams, and industry leaders, any level of uncertainty should be met head-on – waiting to seek clarity can be a losing move.

How do these trends affect you?

Our consumer & retail team welcomes the opportunity to share our perspectives on today’s consumer and retail environment. We can help you revisit your strategic roadmap, including whether now is the right time to sell your business, continue to grow through acquisitions, or raise external capital. Contact us to start a conversation today or learn more about our expertise in retail.

Corporate life often mirrors personal experiences. The COVID-19 pandemic shook the foundations of our lives, prompting a series of unexpected consequences across both our personal and professional domains. At the onset of the pandemic, most people did not anticipate such a significant disruption that would last well over a year. Some have gained the “freshman 15 pounds” during quarantine due to limited mobility, lack of exercise, and extended periods in front of computer screens on zoom calls in sweatpants all day. And there are those who took the opportunity to refocus, establish discipline in their routine, and get in the prime shape of their life. This analogy can be applied to the corporate world as well. Leaning up your organization will remain critically important in this uncertain future.

It’s now over a year since the start of the pandemic, and, despite a stepped-up vaccination program, and a loosening of business restrictions, a robust recovery is still a ways off. Although COVID-impacted earnings are recovering for many businesses, uncertainty remains as to what the new normal will look like, and when it will be reached.

After a slow M&A market in the spring and summer of 2020, activity has picked up through early 2021. Many have delayed M&A in the hopes of maximizing the value of the businesses they’ve built. Nevertheless, there are ways for sellers to achieve their goals, even in the midst of uncertainty.

“This recession will finally end the private-sector ‘debt super-cycle,’ says firm that invented the term” – MarketWatch, April 4th, 2020

Over the past decade, forecasters have been anxiously tracking rising corporate leverage levels and the proliferation of covenant-light loans, while lamenting the woefully declining credit quality of borrowers. Lenders could only “amend and pretend” for so long, they argued, and it would be just a matter of time before we witnessed an apocalyptic deleveraging event that would finally mark the end the current debt cycle. The sovereign debt crisis, tariff war, inverted yield curve, all came and went, but a global pandemic should have been the final straw. As infections and lockdowns spread in early 2020, commentators competed to see who could predict the biggest surge of bankruptcies and corporate defaults.

By Q3 defaults had fallen to below pre-COVID levels, and yields had declined dramatically across the board. In a shocking turn of events, debt issuance had surged to record levels, providing liquidity to healthy and distressed borrowers alike. The ultimate irony was, as S&P Global noted, investors “were so supportive that some of the corporate sectors that saw the largest increases in bond issuance relative to the prior five years were those most negatively affected by economic lockdowns.” Undeterred, commentators have now rolled forward their doomsday forecasts, bracing for an even bigger deleveraging and fallout in 2021. But what if we have collectively “broken” the corporate debt cycle? Consider the following three factors:
First, and foremost, is the Fed backstop, which involved unprecedented direct lending to both investment grade and distressed borrowers. Overnight, the Fed’s balance sheet nearly doubled to $7.4 trillion, all but ensuring that the Fed will be a permanent participant in private credit markets. Markets are inarguably in “risk on” mode, and it’s difficult to imagine any kind of crisis of confidence in the foreseeable future.

Second is the near-mythical “search for yield” and its side-effects, specifically the prolific rise of non-bank lending. Institutional investors, grappling with falling returns on fixed income and other assets, have pushed deeper into the private credit market. AUM at private debt funds has skyrocketed from under $200B in 2007 to nearly $900B, with $300B of dry powder waiting to be deployed. The new breed of lenders is more creative and better-equipped than traditional banks at segmenting and capturing risk premium at all levels of the capital structure. These investors, willing to take greater risks, were happy to put money to work during the pandemic, while banks battened down the hatches and sat on the sidelines. For these lenders, COVID has become a mere EBITDA adjustment, and most were willing to ride out the storm and “amend and extend” into 2021 leaving the search for yield poised to continue unabated into the future.

Last, but not least, is the evolution of lenders’ strategic options for dealing with distressed loans. Historically, a bank loan workout was a lengthy affair, with a forbearance or amendment followed by a two or three-year operational turnaround of the borrower. Today’s lenders prefer to move quickly to exercise their remedies. They are frequently turning to secondary debt sales, special-situation refinancings, carveouts or expedited sales of the company. Increased specialization means that there are buyers for every type of security, asset, and distressed business or division. For deeply troubled credits, options such as Article 9 foreclosures or Section 363 sales can be used as a tool to efficiently foreclose and sell viable assets at premium prices, and then wind down the remaining liabilities through either an in- or out-of-court process. As a top-tier middle market restructuring advisor, we employ these strategies (and more) every day on behalf of our clients, and have witnessed firsthand how lenders can now dynamically shift risks throughout this ecosystem. More and more, lenders rely on our firm to provide not only financial and operational support, but also integrated banking capabilities and increasingly advanced legal sophistication.

In sum, we could be witnessing the end of the broad-based credit cycle, and the start of a new era characterized by more complex, localized pockets of risk accompanied by fewer, but larger, distressed events. The current debt-cycle may live on for some time yet.

Konstantin A. Danilov is a Vice President at G2 Capital Advisors, which provides M&A, capital markets and restructuring advisory services to the middle market.

When crises like the pandemic wreak havoc on businesses, having the right resources in key leadership roles determines whether a Company will successfully navigate a distressed turnaround situation or not.  Rapid and decisive crisis stabilization determines success.  G2 Capital Advisors’ (“G2”) primary objective in a turnaround is to establish a capital and operating structure in line with the strategic priorities and cash generation of the enterprise.   In partnership with key stakeholders, G2 extends the cash runway of the Company to create time for revitalization.  This liquidity management exercise requires information to be developed and presented to a host of critical players, including but not limited to, shareholders, lenders/creditors, management, employees, customers, vendors, and any court appointed Trustees if so needed.

Many turnarounds fail due to a lack of alignment between the Board of Directors and executive management on a strategy and timing to fix the Company.  Bringing in a trusted third-party restructuring advisor, such as G2, to oversee the turnaround as an independent fiduciary can achieve such strategic alignment.    Not all restructuring advisors are created equal and each situation prescribes particular skill sets and capabilities to effectively navigate the corporate turnaround. 

Of utmost importance, every restructuring and turnaround:

1) must have a foundational plan,

2) that plan must be published and communicated broadly  

The entity or entities managing the turnaround must draw ideas out of the Company’s employees and stakeholders and galvanize them into action with an action strategy with specifics on what, when, and how.  In the post-COVID environment, planning and communication have become even more critical as certain industries find themselves at a pivotal juncture.  For many companies, massive strategic and operational shifts, and even fundamental changes to existing business models, will be necessary for a turnaround to be successful in this “new normal.”   

Our successful turnarounds are accomplished by focusing on 4 C’s – Communication, Concentration, Cost Control, Cash Flow.  Traditionally Financial and Operational focused restructuring firms stay on opposite sides of the fence. 

For middle-market companies, hiring separate firms is cost-prohibitive and inefficient.  G2 is uniquely positioned to provide a one-stop shop with a fully integrated team of operational, financial, and investment bankers to address stakeholder needs and maximize ultimate recoveries.

To address critical aspects of a turnaround, G2 proposes a two-pronged approach to focus on both Financial and Operational Restructuring elements.  G2, as an integrated firm, can manage both aspects of financial and operational restructuring within one team.  Usually, a transactional Chief Restructuring Officer (CRO) where there is a strong management team, or an operational Chief Transformation Officer (CTO) where the advisor steps in to run the Company day to day.   G2 is differentiated in our ability to provide both functions to our clients with foundational industry experience.

Options for Struggling or Underperforming Companies

Financial Restructuring

Owning fiduciary responsibilities and representing an independent voice using the Company’s financial data to address the concerns of all stakeholders:

  • Reports to Board of Directors.
  • Serves as liaison to lenders, creditors, etc.
  • Manages all external communications.
  • Leads negotiations with vendors or customers.
  • Establishes go-forward operating cash flow budget.
  • Generates required reporting.
  • Manages any legal filings.
  • Develops a formal Restructuring Plan, driving a successful Restructuring Transaction.

Operational Restructuring

Working with existing management to determine appropriate operating parameters:

  • Identifies useful assets and operations.
  • Discontinues non-performing assets, divisions, products, etc.
  • Prioritizes strategic initiatives.
  • Identifies a few areas for concentration.
  • Implements cost control measures.
  • Minimizes Company cost structure.
  • Manages internal communications with employees. Supports external communications.
  • Sets go-forward performance targets.
  • Augments interim management needs.
  • Architect and executor of Revitalization Plan.

G2 believes any changes in organizational culture will be driven by a vision, encourage feedback and require prompt action.  The CRO in conjunction with a Company’s CEO and management teams must champion that change by cultivating it within the organization.  By actively engaging all employees and helping them understand the new direction of the Company, G2 can achieve multiple objectives:

  • Managing stakeholders
  • Implementing rolling go-forward 13-week cash flow
  • Developing strategic priorities (and if necessary, pivoting to succeed in the post-pandemic “new normal”)
  • Stabilizing operations 
  • Identifying performance/process improvements
  • Driving organizational change
  • Identifying Company Structural Change
  • Instituting risk mitigation parameters
  • Identifying new financing needs
  • Supporting clear communications

Frequent and continuous communication with all stakeholders and interested parties remains critical. G2 builds confidence and trust within these groups through transparency and honesty.  G2’s decisive and clear actions thereafter drive the successful turnaround process.

G2’s highly capable team, including seasoned interim CFOs, Controllers, or FP&A resources, not only can help our clients navigate challenging liquidity or performance environments but also can drive improvement in core finance/accounting functions.

 We offer integrated, multi-product and sector-focused services  by pairing highly experienced C-level executives with specialists investment bankers. Feel free to reach out to the G2 team to learn more about the approaches we are using across our 45 plus clients in our industries of focus. We aspire to be the trusted advisor of choice to our clients including corporations and institutional investors.

Jeffrey Unger
Chairman & CEO
Boston, MA
[email protected]

Ben Wright
Chief Operating Officer
San Francisco, CA
[email protected]

Chris Capers
Managing Director
Boston, MA
[email protected]

Konstantin Danilov
Vice President
Boston, MA
[email protected]


As we enter the typical fall budgeting process, G2 has been assisting our clients in exploring new ways to approach 2021 forecasting given the uncertainty related to the COVID-19 pandemic and its impact on various industries over the near to medium term. Many operators and their finance teams are struggling to reliably forecast their businesses, making strategic planning more challenging and limiting stakeholders’ ability to assess the long-term prospects for their companies. Through our financial advisory and turnaround consulting engagements, G2 has been leveraging a number of key practices to enhance the productivity of 2021 budget building, helping companies and their management teams plan proactively manage the uncertainty:

• Consider New Methodologies
o Year-over-year variance modeling – When a business has seen temporary pandemic related demand disruptions, we’ve applied efficient top down discounts to 2019 actuals or 2020 original budgets to drive revenue assumptions for 2021. The top down discounts can be refreshed based on latest views on the depth and duration of the impact of the pandemic on a particular business or industry. By layering on updated cost structure assumptions based on management’s various initiatives, a full profitability picture can take shape. For indoor businesses, like restaurants or retailers, G2 has been similarly modeling the revenue impact of the pandemic through the winter months in colder geographies in the U.S.
o Bottoms up around the “New Normal” – For companies with significant and likely permanent changes to their operating realties, a bottoms up full budgeting process may be the preferred method. Benefits include revisiting detailed revenue assumptions, which can prompt creative approaches or calls to action to drive new revenue opportunities. Similarly, divisional level, line item by line item review of cost structures can yield material expense reduction opportunities or nimbler, potentially tech enabled operating models explored during the pandemic.
o Build multiple “cases” vs. one baseline budget – Clients that severe pandemic related revenue declines have typically taken a scenario modeling approach to budgeting, focusing more on potential states of the world and the associated impact on the business, rather than on presenting one budget, that with certainty will be wrong.
• Scenarios modeling is more valuable than ever
We value “sensitizing” forecasts based on key assumptions and drivers in order to stress test profitability and liquidity in times of significant uncertainty. By creating upside (vaccine in Q1) and downside cases (no vaccine), leadership teams arm themselves with key insights on the range of potential outcomes for both revenue and expense level recoveries. Furthermore, stress tests provide clients with insight into what breaks the business and how to proactively manage cost structures and liquidity (keeping dry powder for CAPEX or working capital investments) based on topline trends and other key indicators of business activity. Commodity costs can be a key driver of margins and warrant particular scrutiny in scenario models. Stress testing covenants and minimum available liquidity is critical in leveraging forecasts as a tool to provide transparency and peace of mind to lenders at this time. Consider also pulling forward the budgeting process timeline in order to get estimates of potential outcomes in 2021 earlier, allowing management to take more aggressive action sooner.
• Flexibility may be more valuable than granularity
In times of high uncertainty, building granular bottoms up forecasts require significant resources and provide limited value given the pace of change. The return on those resources can be enhanced by building flexible models that can be updated over the course of the year with actuals and refreshed on a rolling basis. A dynamic forecast is highly valuable in providing leadership with real time forward views and empowers nimbler responses on driving revenue opportunities and trade-offs on investment, especially in a recovery scenario where working capital requirements can be significant.
• Bridge Building
We recommend tracking the impact of COVID-19 on revenue, costs, and cash in order to bridge between 2020 actuals to a pro forma, adjusted view of the business. Analyzing 2021 forecasts and scenario cases through EBITDA or free cash flow bridges isolates key assumptions and plays a critical role in educating stakeholders on drivers of performance. For more challenged situations, sizing cash needs becomes a critical output of the 2021 budgeting process, whether funding operating losses or working capital. Solving for these liquidity needs in the form of a “cash bridge” has been a key focus across many G2 engagements with pandemic impacted companies.

G2’s highly capable team, including seasoned interim CFOs, Controllers, or FP&A resources, not only can help our clients navigate challenging liquidity or performance environments, but also can drive improvement in core finance/accounting functions. Feel free to reach out to the G2 team to learn more about the approaches we are using across our 45 plus clients in our industries of focus.

Digitization & Technology

G2 is pleased to present a Q&A session our very own Victoria Arrigoni moderated recently with Jim Gillespie, the CEO and co-founder of | GrayMatter | a leading Industrial Intelligence and Digital Transformation company. We had the opportunity of speaking with Mr. Gillespie to discuss key trends in digitization and technology adoption in manufacturing and middle market companies, including how COVID-19 has affected those trends. Mr. Gillespie has over 30 years of experience curating technology and guiding the digital process for manufacturing companies. GrayMatter enables assets and people to become smarter, more visible, and more productive. Through co-innovating with companies in manufacturing, water/wastewater, power, and oil and gas markets, GrayMatter delivers custom-fit operational technology programs and solutions.