Junaid Samnani Shares How PE-Owned Businesses Can Brace for Tough Times

A private equity consulting leader said firms’ portfolio companies need to control costs and lean into disruptive technology to get in front of economic challenges.

By, Catherine Leffert, Staff Writer, Dallas Business Journal

Junaid Samnani leads the Dallas office of Accordion, which works with private equity firms to expand portfolio companies’ CFO capabilities. As inflation, supply chain pressure and a tight labor market stretch the economy, Samnani said companies need to have a clear understanding of their day-to-day liquidity and use digital transformation to control costs.

Record-breaking merger and acquisition levels in late 2020 and 2021 were a boon for Accordion, but Samnani said the firm’s restructuring and turnaround business is increasing as the economy cools down. Accordion acquired restructuring and turnaround firm Mackinac partners last May in anticipation of more distressed situations.

“I don’t think there’s any firm that is focused around private equity, and the office of CFO — and that is the intersection we play at,” said Samnani, who also co-leads the firm-wide Transformation Practice. “Then also, the restructuring turnaround capabilities that we’re bringing on are going to help us really counterbalance any downturn in the marketplace.”

The firm, which opened its Dallas office in 2019, plans to increase its local workforce from about 35 to nearly 60 by year-end, Samnani said. Accordion planted an office in North Texas due to the high volume of private equity firms and portfolio companies across the state.

Now, Samnani said Accordion is seeing more demand from companies for integration, expanding financial analysis and restructuring.

Here’s what else Samnani said about what the private equity consulting firm is seeing in the market:

What’s in high demand from your practice in Dallas?

There are some trends that we’re seeing in the marketplace. I would say (strategic financial management) and analysis has been a big push. We even did a recent survey — 81% of PE sponsors felt like the finance organization wasn’t doing a great job measuring the business, collecting the data and organizing. That is the genesis of Accordion. Our initial practice was us being able to come in, not only look at financial data, but put together a clear perspective on operational data and understand, ‘What are the levers that they can pull to really create value from a private equity perspective?’

A second area that we’re seeing a massive trend in is really around the transformation work that we do and CFO tech. It’s hard to hire folks, and the cost of bringing in folks is getting higher and higher. Organizations and technology companies are getting smarter and they’re wanting to adopt disruptive technology, such as robotic process automation, or introduce the concept of digital workers in the marketplace, in order to have less dependency on the resource-constrained environment that we’re all working in.

How are some of these macroeconomic factors influencing your services and the recommendations you’re making?

People are, with the way the equity markets are performing, getting a little cost conscious around, ‘Okay, is there a potential recession coming?’ They’re ensuring that their forecasts are accurate, that they have a better understanding of costs and potential risks. From a data analytics perspective, it’s really important to get a strong control around your data, and understanding what the forecasts of that data looks like over the span of the next few years, given where the markets are.

On the restructuring and turnaround practice, describe what you’re seeing, and how that’s affecting your business and your services?

In the turnaround restructuring world, we’re seeing an uptick in distressed companies. The first reason is liquidity concerns. There’s a margin compression that’s happening in the marketplace, which is due to inflation, supply chain issues, and labor costs are going up. Second, the higher interest rates are putting a major strain on businesses to be able to service their debt. And then lastly, management teams are really stretched.

Lastly, I would say lenders are losing a little patience. During COVID, there were a lot of times where there were amendments and extensions that were given to covenant breaks. Now that COVID is ramping down, lenders are getting concerned that they need to take action to maximize the recovery of their dollars. They’re having that internal debate right now, company by company, to determine whether they should do something now, or if there is another amendment that they need to put in place.

This interview has been edited for clarity and brevity.