Pivoting During COVID-19

When it comes to quick pivots at the outset of COVID-19, consider that of Avant Advisory Group, which helped businesses survive the first three months of the economic shutdown.

The Newport Beach-based operationally-focused financial advisory and management consulting firm entered March on a roll with work in various stages of mergers and acquisitions in five separate transactions.

Avant, with offices in Los Angeles, Newport Beach, Salt Lake City and New York, also handles financial forensics, fraud, and corporate investigation projects while providing consulting expert and testifying expert witness support on a variety of litigation cases.

Avant’s founder and president, Jim Davidson, described business as robust — until government-mandated lockdowns in reaction to the coronavirus occurred in mid-March, triggering economic upheaval across the nation, state-by-state, city-by-city.

Like the majority of U.S. businesses, Avant’s fortunes suddenly turned. “All M&A related services came to a screeching halt,” Davidson says.

M&A deals in North America precipitously dropped: GlobalData reported 820 deals in March, down 20% from February (1,024 deals) and 30% from January (1,178).

The ramifications of COVID-19 quickly impacted the financial system and Avant clients, many of which are private equity and family office investors.  Many of Avant’s portfolio companies, especially those in consumer goods and services, were immediately — and adversely — affected. Most were forced to shut down because they were deemed “nonessential.”

“Overnight, liquidity became a challenge for every one of those companies as revenues dropped to a trickle or to nothing at all,” Davidson says. “It became the single-minded focus of every client and soon-to-be clients that we helped.”

Many clients — and prospective clients alike – immediately turned to Avant to help navigate the application process to access federal loans backed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the $2 trillion rescue package. The legislation allocated $877 billion to prop up lower and middle market companies in the first salvo of financial support.

All told, in less than three weeks, Avant helped 11 companies access financing through the Paycheck Protection Program and the Economic Injury Disaster Loan Program, which was created to assist businesses affected by the disaster.

“As soon as the programs opened up, we had already helped position one important client to immediately apply and receive $6.3 million,” Davidson says. “That was its saving grace. Our client may not have survived had it not received that critically-needed financing at the moment it had – truly a blessing.”

Many companies and Avant clients are just beginning their comeback as uncertainty looms over the U.S. and global economy.

“We still have significant economic challenges,” says Davidson, who spent his first 10 years at PricewaterhouseCoopers and another 25 in industry and business consulting. “There isn’t much visibility on how this is going to go, and the current riots only exacerbate the economic damage and uncertainty.”

As a senior manager at Big Four CPA and consulting firm, PwC, Davidson specialized in M&A, turnarounds and restructurings of distressed companies and large corporate bankruptcies. He entered the private sector to lead executive finance and M&A leadership roles at a $3 billion company followed by CEO, COO, CRO, and CFO roles at other companies. He later launched Avant to perform acquisitions, turnarounds and restructurings, forensic, fraud and corporate investigations.

That long resume of 35-plus years’ experience, steeped in due-diligence, M&A, restructurings and turnarounds of distressed companies has well positioned Avant.  Already, the firm is serving a growing contingent of financially stressed and distressed companies and their potential suitors as the economic fallout moves into summer and beyond.

“As liquidity generated by the SBA funding programs dissipate as any economic rebound occurs, more distressed companies will need to be restructured, acquired or liquidated,” Davidson says. “And, we’ll be right there to help.”

Avant focuses on serving companies in the lower to middle market, a niche Davidson considers ranging $50 million to $250 million in annual revenues.

M&A will come back, Davidson says, especially for firms versed in handing complex distressed acquisitions.  “Not everybody can do that,” he says. “I’m a man of faith, and I know we’re in the right place at the right time.”

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This article was edited and published by Rick Weinberg, California Business Journal’s Founder and Editor-in-Chief. Click here for Rick Weinberg’s biography.