In what has to be seen as a sign of the times, financial advisory firms are spotting opportunities and moving their operations into Australia.

What’s a financial advisory firm? Well they can be seen as paramedics in an emergency ward for businesses. They also operate as undertakers.

These businesses attempt to rescue, restructure or liquidate financially distressed companies. It’s big business in the US. And it’s predicted to be big business in Australia.

They attempt to deliver higher returns to stakeholder when winding up companies. Often they will try to avoid a company going entirely into receivership. Instead they’ll amputate a poor performing arm of a business and use what they get in return to invest in more profitable areas.

With these rosey projections financial advisory businesses then go to creditors and pitch for money.

Tiger asset Group. Photo:

Tiger asset Group. Photo:

In an interview with Damian McCarthy and Bob DeAngelis, of US giant Tiger Asset Group, talked about the opportunities in Australia. Currently Tiger Asset are picking over the bones of drilling, engineering, contracting, and mining equipment rental and maintenance firms. These are businesses that hoped to cash in on the mining boom, but missed out.

The business is also dealing with many bricks-and-mortar retailers being driven to the wall by their online counterparts and cheaper overseas imports.

Both men predicted their business would only increase in the foreseeable future.

Many operators in the mining industry have nearly 100 per cent of their assets financed. Small retailers are being squeezed out by big retailers. And big retailers are being squeezed out by online retailers.

Mr McCarthy believed management were to blame for most of the insolvencies that crossed his desk. “Management” he told, “will normally blame factors outside their own control, like the economy or movement of the dollar. In my experience it’s management’s inability to foresee the future and to react to change. That’s pretty common in most business failures – complete denial from management about how they ended up in formal insolvency.”

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