Understandably, many investment managers find that meeting their clients’ needs for restructuring expertise through the cycle is quite challenging.

• Too many in-house resources results in underutilization of highly specialized (and highly paid) restructuring professionals during cyclical peaks/upturns;

• Too few resources, especially during sector meltdowns/cyclical downturns, exposes investment managers to a number of risks including: increased write-downs, higher credit losses, and missed upside from not actively participating in workout situations.

The cost of having too many or too few in-house restructuring resources through the cycle can be quite high.

Investment managers are often reluctant to permit employees to participate in potentially productive private negotiations owing to a number of issues associated with information flow.

Prospects for a successful restructuring decrease when seasoned restructuring professionals are excluded from active participation in private negotiations.

Internal tension and/or conflicts often arise when utilizing in-house restructuring personnel.

Internal circumstances (i.e. tension, conflicts, political sensitivities, the “blame game,” etc.) that delay or hinder the involvement of restructuring professionals in an active restructuring process can have an adverse effect on recoveries/outcomes.