in the Face of Volatility
Mica Arlette, CPA, CA,
CIRP, is a partner with
has worked across Canada, the
U.S., the United Kingdom, and
Europe. He’s helped clients to
preserve value and restructure
successfully, advising on
restructuring strategies for clients
in a wide range of industries.
Arlette holds a bachelor’s
degree of commerce (honors)
from Queen’s University in
Kingston, Canada, and is a
Chartered Insolvency and
BY MICA ARLETTE, JULY/AUGUST GUEST EDITOR
other emerging markets. Expectations for
global GDP growth were set by the OECD
last fall at around 3. 7 percent for 2015.
The optimism that greeted the new
year has faded. Instead, slower
growth and greater volatility around
the world have held sway, with the
U.S. economy in fact contracting
by 0.7 percent in the first quarter.
The Bank of Nova Scotia summed it
up well in April: “The global economy
remains an underachiever, with
weakness persisting across most
advanced and emerging market
economies. There is little evidence
of a more synchronized and broader
economic revival underway around the
world.” By June, the OECD had given the
global economy a “barely passing” grade
of B-, with projected global GDP growth
of only 3. 1 percent for the full year.
It’s easy to pick on economists, but
factors like the falling price of oil and
the appreciation of the U.S. dollar have
wreaked havoc on expectations and
added to risk in emerging economies.
Ongoing concerns about the impact
of a potential Greek exit from the
eurozone and the risk of a further
slowdown in Chinese growth have
not helped matters either. A return
to pre-recession growth levels looks
increasingly unlikely in the absence of
greater demand growth and investment.
Some suggest that “good growth” in
global GDP may now be anything
consistently in the 2-3 percent range—
not the resilient recovery hoped for.
A flat economy does little to inspire
investors—and means turnaround
and restructuring professionals need
to be more creative. Some niche
buying opportunities are emerging,
particularly in resource sectors; M&A
activity is increasingly focused on cost
improvements and synergies; and
restructurings are relying on buy-in to
slow-and-steady growth strategies.
For this edition of JCR, we asked our
global panel of authors to consider
sectors and issues in their parts
of the world that are creating or
impacting investment opportunities.
Their observations speak to the
need for that longer-term view.
Jeremy Webb and Robert Turner of
PwC in the UK provide a perspective
on the impact of lower oil prices and
how this is starting to drive economic
and restructuring activity around the
world. The impact on short-term
discretionary spending and exploration
in expensive regions has been clear, and
the stronger investment and turnaround
opportunities may still be to come.
Robert Omer and Christian Wewezow
of Omer Legal Group and Clockwise
Consulting GmbH, respectively, provide
a perspective on the Mittelstand
companies, which are key drivers in the
mid-market of the German economy
as well as on the global stage. They face
significant challenges not only in the
face of global economic conditions,
but also from a succession gap that
has emerged within the last decade.
Tom Pugh of Mayer Brown JSM
highlights some of the changes in
the landscape for foreign investors in
China. Reforms have been proposed
that attempt to address concerns for
both onshore and offshore lenders, but
questions remain about the practical
implications of those measures.
Alejandro Sainz of Cervantes Sainz
takes a practical look at the changes
in the concurso provisions in Mexico
and the implications for investors and
other participants in the restructuring
process. The amendments were
part of a broader financial reform
package that addresses a range of
issues, though practical challenges
remain and restructuring participants
need to be cognizant of these. J
Someone once joked that economists were created to make weather forecasters look
good. Unfortunately, these days, it’s
tough to say who’s doing a better job.
A little over a year ago, the Organization
for Economic Co-operation and
Development (OECD) encouraged
global economies to pursue a “resilient
recovery” from the economic downturn.
Expectations were that the recovery
would still take time, but that improved
results in the U.S. (particularly after a
rough winter) could counteract risks
from moderating growth in China and