Corporate Turnaround Artistry

Chapter 4When Banks Attack

When a business's results slip and the bank has that first tough conversation with the owner, emotions often surge. The owner's mind swirls into a sea of thoughts which usually follow this arc:

What the heck, these guys are my buddies, they just recently invited me to their annual golf event last summer – and I even met the local president who was very complimentary of me and my business. There must be a mistake; I've been borrowing money from this bank for 10 years and the people there have always told me I was one of their valued clients. By the way, have you seen the amount of interest I'm paying to those greedy bums annually? They're in the business of lending money; why would they want to limit my ability to borrow now? They knew the risks, etc.

I know, I've been there. One day you're the bank's best friend and the next day you're not. Over the years I've realized that banks really only have two departments: lending and collections, finders and grinders. That guy with the nice suit, expense account, and low golf handicap (your buddy) – he's the finder/lender. The rumpled troll with a sour disposition, no expense account, and no golf game – he's the grinder/collector. Banks develop pleasant euphemisms for the collection department like workout, special assets, and specialized finance, but the jobs are is all the same – to get the bank's money back from you.

During my first turnaround, our banker (Kenny – strong handshake, winning smile, great ...