July 2020 Newsletter


  • Exclusive financial advisor for the refinancing of a $12 million line of credit for a $60 million consumer products manufacturer after a successful turnaround
  • Exclusive financial advisor for the refinancing of a $5 million line of credit for a $25 million service and repair company after a turnaround
  • Buy-side advisor for a $40 million commercial printer in its acquisition of a $18 million competitor


Since early March, we have monitored the impact of COVID-19 on our client base. As expected, early results display widely divergent financial performance - some industries have greatly outperformed expectations while others have greatly underperformed.


Our retail food supply chain clients, particularly our food processors and distributors serving the grocery channel, have seen record-breaking months despite occasional COVID-19 related closures and large amounts of stockouts, which represent lost revenue opportunities.

Similarly, digitally native e-tailers, specifically our clients serving outdoor and fitness-related segments, have significantly reduced existing inventory, and seen a surge in order activity, much sooner than during a typical cycle, and with no apparent let up.


We have observed significant sales declines in industries serving large OEM manufacturers, automotive, aerospace, oil & gas - due to COVID-19 related plant closures, as well as reduced up-market demand in these industries. In addition, transactional businesses such as commercial print have struggled.

Auto demand has bounced back quickly, particularly for trucks & SUVs. However, auto supply chains continue to struggle to meet demand due to several factors - foreign suppliers (specifically those in China) have not been able to catch up, and domestic suppliers are struggling to onboard labor, with many workers opting to stay home due to the $600 incremental increase in unemployment benefits (which expires July 31). Potential delays in model year changeovers will provide additional stress to this sector in the near term.

Wholesale food distribution clients - those that distribute into foodservice channels - particularly restaurants, bars, schools, casinos, airlines, cruise lines, penal institutions – have seen decreased demand. Reduced demand appears to be primarily driven by the wide variance in individual state reactions to re-opening/closing businesses that serve the public.


The education sector response is still in flux due to COVID-19, with solutions ranging from online-only distance learning to hybrid schedules; this will create winners and losers in the next few months as seasonal purchasing will come to a peak.

FIG. 1

PPP Loans thru July 13, 2020:

  • Total Loans = 4,913,551
  • Total Amount = $517,494,070,564
  • # of Participating Lenders = 5,455

Source: www.sba.gov

While construction activity remains strong today, as this industry was labelled ‘essential’ - how this industry evolves over the next six to nine months (and beyond) is of concern. Seasonal slow-downs will begin and it is likely that employers will have to make adjustments to staffing as the world adjusts to a new ‘normal’ of reductions to office building construction and usage (due to increased work-from-home arrangements) and retail closures have led to increased on-line shopping, reducing the need for/and construction of new buildings.


We are now seeing the initial impacts of COVID-19 on top line sales in our clients. Our clients worked through existing backlog and sales pipeline opportunities through March and April. May results reflected sales declines ranging from 20% to 50%+ below normal monthly expectations. June results are taking longer to compile. Typically, delays in reporting do not provide pleasant surprises.

In addition, our clients with forward-looking production schedules are seeing their customers delay or simply remove items from production without timely notification. With concerns for a second wave of COVID-19, we are still working to determine if this recovery is “V”-shaped, “U”-shaped, or even “W”-shaped.


In the face of the potential disastrous impact of COVID-19 on the U.S. economy, the U.S. Government took action to inject unprecedented liquidity into the middle market. The U.S. banking system approved more than 4.9 million loans totaling nearly $517.5 billion through July 13, 2020 (see Fig. 1). The PPP resumed accepting applications on July 6th with a new deadline set for August 8th. Without this injection, several of our clients would have been forced into some sort of protection and possibly sale or liquidation.


Until a vaccine is developed and distributed, the economy will struggle to return to stability and normalcy. Thus, managing cost structures and liquidity will be critical during the COVID-19 period. The time to prepare is now while the liquidity from the PPP funds remain available. Companies with strong balance sheets will be best suited to navigate these uncertain times. Companies should be preserving cash to the best of their abilities, reducing excess capacity and selling idle equipment and preparing for expense reduction actions if sales don’t re-materialize. There is no guarantee of a 3rd round of loans from the PPP.

Additionally, there are potential opportunities to pick up new market share and customers from competitors who will not make it through this new environment. We recently assisted a client with their acquisition of a competitor that (1) provides near term additional sales volume during COVID-19 and (2) will provide much needed sales to fill out existing excess capacity in their plant when sale volumes return. Terms were very favorable and an agreement was reached very quickly due to the current environment (Success Stories on prior page).

Contact Us

Kevin Cleary, Partner
(312) 683-3642

Bill Marra, Partner
(312) 683-3653

Brice Deer, Partner
(312) 683-3657

Fort Dearborn Partners, Inc.
190 S. LaSalle St, Ste 1650 | Chicago, IL 60603

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