Chris Felderman
speaker
53 appearances
2 recordings
1 series
first heard Feb 2025
last heard May 2025
Chris Felderman’s voice in public audio — every appearance, attributed to the second.
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Appearances
Sure. Thanks, Scott. It's great to be here. As you said earlier, my name is Chris Felderman. I'm a senior managing director here at Palmtree. I lead our Chicago office and I oversee the operations of the firm's consulting practice. Palm Tree, we like to consider ourselves the modern M&A and operations advisory firm.
And our primary objective, especially of our consulting offering, is to provide perspectives on financial and operational data to enable buyers and sellers to make more informed decisions to drive value creation. We typically provide support, well, we can provide support across the entire investment lifecycle.
Pre-transaction, our offerings include financial and operational due diligence, so think quality of earnings. We also provide pre-closed accounting and finance operations diagnostics around the people, process, and systems, as well as data and analytics assessments.
And post-close, our transitional offerings are generally focused around the things that companies taking on institutional capital for the first time typically have not focused on, which includes accounting and finance support, enhancing that and optimizing the financial reporting process, cash management, networking capital management, improved process documentation, and even interim support such as CFO, VP of Finance, or Director of FP&A and the like.
And on the performance improvement and value creation side, we offer solutions like auto preparedness, financial forecasting, and budgeting enhancements. data and analytics improvements and implementations, as well as operational assessments and improvements that provide true value creation and enhance enterprise value. And we do this through a solution.
We offer these solutions through a bench of nearly 100 professionals across our four main offices in L.A., Chicago, Detroit and Dallas, many of which have prior big four corporate finance or investment banking experience.
Yeah, I think it's especially important for private equity-backed portfolio companies that, you know, whether they're purchasing raw materials on an import basis or whether they are, you know, manufacturing overseas and need to bring that product back to the back state side. I think now is a time to really assess what the costs of those imports are doing. And I think
Our sense is that these announcements, and generally speaking, the uncertainty around them is absolutely increasing challenges for PE firms. And it's not only in the operations of their portfolio companies, but it's also in their ability to source, evaluate, and ultimately close on those new investment opportunities. And I can
go into some detail on some of the short-term risks and opportunities that they can look into, and then maybe some of the long-term as well.
Yeah, in terms of the shorter term challenges, I think immediate term, portfolio companies, their management teams, even the deal teams that are working on them on the sponsor side, they really need to identify the product and supply chain exposure that each of their portfolio companies have, meaning what key costs either are affected or are going to be affected by current or pending tariffs.
Maybe they manufacture goods in another country, maybe they import raw materials for production here in the US. Once they understand that, they then need to assess the effect of the cost increases on both profitability and liquidity. How much inventory can the company pre-buy Or how much of any cost increases can it absorb before having to pass some of those costs along to its customers?
And how sensitive will the customer base be to those increases? Or are they able to negotiate something mutually beneficial with their vendors to help preserve their margins? And in the case of pre-buying inventory to avoid any short-term tariffs, what are the downstream effects of tying up working capital in that way?
I think those are some of the key immediate and short-term assessments that need to be made. And then over the longer term, it's perhaps assessing things like the ability to move suppliers or whether products can be redesigned with components that don't have as much exposure to tariffs. But obviously, those take a little bit longer to play out.
And given the uncertainty right now, it might not be necessary, but it's something that can absolutely be planned for for the longer term.
Yeah, well, I think the services side is less prone to the tariffs and that quite honestly, might be where we see an uptick in deal activity, which is more focused on services and items that don't need to be sourced from outside of the United States.
So if there is a potential silver lining to the environment we're in from a deals perspective, I would imagine that's where a lot of the deal flow will begin to come from if the uncertainty continues.
Yeah, I think the uptick in the stock market is more driven on whether there's certainty or not. And I think just the shock to the system that happened over the past several weeks, and it's allowed itself to calm down with some recent developments and and changes in the tariffs. And I think people are, and the market in general is getting a little bit more comfort with that.
Not quite back to where we were pre-announcement, but obviously getting closer. I think some of the good news is that not all, like I said earlier, not all middle market, lower middle market companies are significantly impacted by the recent tariff news. So on a deals front, I think deals can continue to happen, say in the financial services,
maybe in the healthcare sectors where there isn't a sourcing of components from overseas, and it's more focused on the services side of things. And furthermore, from a silver lining perspective, I think if there is a slowdown in deals and sponsors do need to hold on to their portfolio companies a little longer than they originally anticipated, now's a good time to make additional investments in
certain value creation initiatives as a way to enhance that business for when a sale process does begin to make more sense and there is more certainty in the market.
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