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The Cedar Croft Consulting 5-Minute Mile News – Issue 3

Cedar Croft Consulting News

Minute 1: Should AI replace Chief Restructuring Officers (CRO’s)?

A Chief Restructuring Officer (CRO) is a senior executive responsible for leading the process of restructuring a company facing financial or operational challenges. An AI-based CRO, also known as a Digital CRO, would use artificial intelligence and machine learning algorithms to analyze the company’s financial and operational data and identify areas that need improvement.

An AI-based CRO could analyze vast amounts of data and provide insights that a human CRO may not see. It could also automate many tasks, such as forecasting and risk analysis, that a human CRO would have to manually do. This could save time and resources and help speed up the restructuring process.

However, an AI-based CRO would not replace human decision-making entirely. It requires human oversight to ensure that AI’s decisions are consistent with a company’s goals and values. Above all, an AI-based CRO cannot account for unexpected events or changes in the market. And that could affect its ability to make accurate predictions.

An AI-based CRO could be a valuable tool in the restructuring process. However, to ensure that the company’s restructuring efforts are successful, AI needs to be used in conjunction with human expertise.

Minute 2: Tipping – The Guilt Tip

Tipping is a practice that has been around for centuries, but it still remains a subject of confusion and controversy for many people. There are countless situations (from restaurants to hotels to salons), where tipping is expected. That said, the amount and etiquette can vary widely. Tipping is a way to show gratitude for good service. It’s not mandatory, but “expected” in certain situations. For example, when you go out to eat, it’s customary to leave a gratuity for your server, typically around 15-20% of the total bill. This percentage can vary depending on the quality of service, with exceptional service warranting a higher tip.

Point-of-sale (POS) platforms have ushered in the rise of “iPad tipping”, leading many to tip when they normally wouldn’t, to avoid looking stingy in front of the cashier. Here’s one uncomfortable situation.

Over the last two quarters, Indiana led the US with the highest average tip rate, while California had the lowest.

Minute 3: Private Companies’ Boards Still Suck at Gender Diversity

Overall women hold more jobs than men, yet a recent study shows that men still hold 91% of executive board seats of US private companies. Technology companies lead the way in not leading the way. While 75% of life science boards have at least one woman (compared to technology’s 61%), just 19% of directors are women, and only 5% women of color. Of all surveyed companies, 32% of boards have no women whatsoever, and 76% of them don’t have a single woman of color.

The most baffling part – it’s just plain good business to have a more diverse board. Per the study, companies with at least one female board member raised 16% more money than their all-male counterparts.

Minute 4: Quick Intervals

  • Bubble tea is brewing up serious profits in the US. Bubble tea, or boba, has been the hottest tea trend in America over the last decade. Although the tapioca treats have been expanding rapidly across the nations, this is one craze that doesn’t appear to be at risk of popping anytime soon. Bubble tea franchises are growing rapidly – Kung Fu Tea has 350 locations and $240m of annual sales; Taipei-based CoCo Fresh Tea & Juice has expanded its North American footprint by 77%; in 2019 Boston-based TA Associates acquired Taiwan’s Gong Cha for $270m.
  • Retail shakeup (apocalypse) continues. Major retailers have announced as many as 2,285 stores are set to close across the US in 2023. Some companies are navigating bankruptcy proceedings, while others are aiming to cut costs. Several are adjusting store formats to meet changing shopping trends. Leading the list is Bed Bath & Beyond, which has declared bankruptcy and closed 896 stores across three brands.

Minute 5: Cedar Croft News

Current and recent engagements

Plastic resin distributor, Southeast US.Cedar Croft is engaged as Chief Restructuring Officer to develop and implement an out-of-court recapitalization for this middle market company.

Quick service restaurant chain, Northeast US. Cedar Croft is engaged by this third generation family owned and operated business as Financial Advisor to lead forbearance and restructuring arrangements with the company’s senior lender, and to position the company for expansion.

Engineering services firm, Washington, DC.This second generation-managed business provides aerospace and aeronautical engineering services as the prime or sub on government contracts. Cedar Croft is engaged as Financial Advisor to facilitate project financing and maintain lender relationships.

Aircraft maintenance, repair and overhaul firm, Ontario, Canada.Cedar Croft recently completed its engagement as Chief Restructuring Officer to develop and implement a plan of reorganization for this company operating under CCAA protection. The company was sold under a Sale and Investment Solicitation Process.

More selected case studies from our earlier work can be found on our website here.

Upcoming events

Cedar Croft has sponsored or is sponsoring (and/or attending) the following events in 2023.

Cedar Croft Consulting provides turnaround, workout, crisis and interim management, corporate restructuring, bankruptcy, financial advisory and distressed M&A services to lower and middle-market companies located throughout the US and Canada. Contact Pat Walsh via our contact form or 917-674-2273. Go to his calendar here to schedule a consultation call.

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