Managing Through the COVID-19 Crisis: A Guide for All Business Leaders

© 2020 Strategic Value Partners, LLC. All rights reserved.CONFIDENTIAL
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Strategic Value Partners (SVP):
Managing Through the COVID-19 Crisis
For Discussion
April 16, 2020
Contact Us
David Gross
Founder & Managing Director
(469) 544-6680
david.gross@consultsvp.com
www.consultsvp.com
Connect with me on LinkedIn

© 2020 Strategic Value Partners, LLC. All rights reserved. 1CONFIDENTIAL
TODAY’S AGENDA
• What We Know vs. What We Don’t Know
• Our Core Beliefs on Managing Through a Crisis
• Appendix

This is a critical point in our history. Time is
running out to prepare for the next pandemic.
We must act now with decisiveness and purpose.
Michael Osterholm
Director, Center for Infectious Disease
Research and Policy (CIDRAP)
In 2005 and 2017
I think right now we're in uncharted territory with
this [COVID-19] virus. By July, it could be largely
absent from our communities or it could be a big
problem. By early May we ought to be starting to
have a better handle on it.
Michael Osterholm
March 3, 2020
As soon as China goes back to work and people
are on subways and trains,... we are going to see
a resurgence of cases back in China…we will
only be saved really when we have a vaccine
Michael Osterholm
March 17, 2020

COVID-19 CRISIS: WHAT WE KNOW VS. WHAT WE DON’T KNOW
What We Know
• Coronavirus (COVID-19) is a global pandemic — i.e., “an epidemic occurring worldwide, or
over a very wide area, crossing international boundaries and usually affecting a large number
of people”1
• In the US, there is not enough protective equipment, diagnostic test kits, reagents, or
lab/point-of-care processing capacity to meet the testing needs for known, suspected,
and potential carriers 2
• The DJIA, NASDAQ, and S&P 500 are down ~30% from their all-time highs in February 2020
• COVID-19 poses new and substantial risks to the already-fragile overnight lending market
- In Sept 2019, the market began to malfunction. In response, the Federal Reserve
(Fed) jumped into the market — marking its first intervention since the 2008 financial
crisis
- Over the subsequent 6 months, the Fed pumped hundreds of billions of dollars into
the market
- In the last few weeks, the Fed has announced trillions in new interventions
- Despite these aggressive moves by the Fed, the overnight market remains fragile
- Interest rates on these loans are rising, indicating that inflation could be coming
• In Washington, there is bipartisan support to spend trillions of dollars to try to stimulate and
stabilize the US economy
• No industry is immune from the negative implications of COVID-19. However, the aerospace,
automotive, healthcare, retail, and media industries are especially vulnerable over the
next 30 to 90 days
What We Don’t Know
• How long will COVID-19 last?
• How many people will be physically impacted?
• How long will people remain at various types of
work?
• What are the impacts (+/-) of large numbers of
workers collaborating remotely?
• How will the virus impact family units — e.g.,
will younger family members reduce their hours
to care for older relatives?
• How will consumers and businesses change
their behaviors? Are these changes temporary
or permanent?
• Which industries will “bounce back”? Lag in
their recoveries? Never recover?
• What impact will efforts by the President,
Congress, and the Fed make in the short-term?
Mid-term? Long-term?
• What will happen in other countries?
1 Last JM, editor. A dictionary of epidemiology, 4th edition. New York: Oxford University Press; 2001
2 Within the healthcare industry, SVP has been and is active in the medical diagnostics sector

PUTTING THIS CRISIS INTO PERSPECTIVE: MARCH 18, 2020

PUTTING THIS CRISIS INTO PERSPECTIVE
Rampant
underreporting

By April 16, the number of
confirmed cases increased to
2,100,000+ (10x increase)

March 18: 4.0% death rate
April 16: 6.7% death rate

March 18: 120,000 unknown outcomes
April 16: 1,400,000 unknown outcomes

“Recovered” may not
equal “full recovery”

GIVEN ALL OF THESE UNCERTAINTIES,
HOW SHOULD LEADERS MANAGE THROUGH THIS CRISIS?

SVP’S CORE BELIEFS ON MANAGING THROUGH A CRISIS
4
1 2 3
6
Develop “Crisis & Continuity
Playbook”, endorsed / approved
by the Board of Directors, and
review and test it annually
Think strategically — e.g.,
How can we…
• Care for our colleagues and enable
them to achieve the previously
unthinkable?
• Partner to solve immeasurable
challenges?
• Come out of this crisis with greater
market share?
Manage change through
single organization/team with
a clear mandate, adequate
resources, and real authorities —
e.g., program management office
(PMO) or office of the chairman
5
Implement quickly — don’t
waste time on naysayers or
searching for “perfect” answers
Forecast and track cash
maniacally and take decisive
action to stop cash burn —
“waiting it out” doesn’t work
Communicate frequently and
directly to all stakeholders,
acknowledging what you know
and what you don’t know
# Covered today

THINK STRATEGICALLY2
Markets &
Customers
Costs
CompetitorsCapabilities
Key Components Examples of Critical Work & Conversations

MANAGE CHANGE THROUGH A SINGLE ORGANIZATION3
Develop Fact Base &
Prioritize Initiatives
Design & Stand Up
Program Management Office
(PMO) or Similar
Launch Core Processes & Tools
Identify & Manage
Critical Interdependencies
Achieve Healthy &
Effective “Cadence”
Our 5-Step Approach

Leading US Paper Products
Manufacturer
(PE-Owned)
Leading US Distributor
w/ Private Label Business
(Publicly-Held)
Leading US Pet
Specialty Retailer
(Publicly-Held)
Leading Latin American
Airline (x2)
PMO Design, Launch
and/or Management
Turnaround
Situation?
✓
✓
✓
✓
Leading US Consumer
Electronics Retailer
(Publicly-Held)
✓
Leading US Cleaning Products
Manufacturer
(Privately-Held)
✓
✓
✓
✓
✓
✓
✓
PMO: REPRESENTATIVE & RELEVANT WORK3

IMPLEMENT QUICKLY4
Streamline
organization
Operate in
terms of
scenarios,
not
absolutes
Revamp
targets and
incentives
Key Components Examples of Critical Work & Conversations
Spans & Layers
Compensation Adjustments
XX
Positions redefined to
include new duties
Duties
reassigned
1. Employee
engagement
survey results
2. Industry &
comparable
benchmarks
a. 2019
b. COVID-driven
news and filings
Compensation Committee Agenda
3. Leadership team’s
voluntary reductions
4. Recommended
adjustments to
non-executive comp
5. Recommended
benefit changes
6. Financial impacts
7. Legal advice
8. Next steps

FORECAST AND TRACK CASH MANIACALLY5
Income
statement
forecasting
Daily cash
flow forecast
Balance
sheet
forecasting
Daily cash
management
and
reconciliation
15-month
cash flow
forecast
13-week
cash flow
forecast
Debt
covenant
compliance
Mgmt,
Board, Bank,
and SEC
reporting
Variance
analysis
Examples of Critical Work & ConversationsKey Components

COMMUNICATE FREQUENTLY AND DIRECTLY6
Employees SuppliersCustomers
Community /
Public
Relations
Bank
syndicates
Government
regulators
Investors
(current and
potential)
Examples of Critical Work & Conversations
Press Releases
Investor Presentations
Key Components

Prepare for the unknown by studying how others in the past have coped with
the unforeseeable and the unpredictable.
- General George Smith Patton, Jr.

Contact Us
David Gross
Founder & Managing Director
(469) 544-6680
david.gross@consultsvp.com
www.consultsvp.com
Connect with me on LinkedIn
MANAGEMENT CONSULTING FOR
EXTRAORDINARY CLIENTS ℠

APPENDIX

Strategic Value Partners (SVP) delivers tangible results through
strategic planning, team building and development, and intensive
change management. Communication is central to our work, and
we integrate corporate and investor communications into
strategies and plans from our first day on the job.
Our clients are our business. We strive to collaborate with our
clients over years, follow strict internal policies on potential
conflicts of interest, and align fee structures with client objectives
and results.
Our clients are the Boards, CEOs, CFOs, and Business Unit
Heads of global public and private companies. We also work with
alternative investment managers. In every case, our goal is to
create exponential returns while proactively managing strategic,
operating, and financial risks.
STRATEGIC VALUE PARTNERS

SVP keeps our work confidential…
Our clients deserve it, and our business
depends upon it…

Transaction
Management
Performance Excellence &
Change Management
Strategic
Advisory
• Strategic Planning Offsites
(Board and/or Management)
• Corporate & Business Unit Strategies
• Portfolio & Individual Business Reviews
• Business Plan Development & Checks
• Operating/Financial Model Development
& Checks
• Scenario Planning / “What If…?”
• Customer, Product Marketing & Marketing
Strategies
• Primary Competitor Research
• Relative Cost Position Benchmarking
• Restructurings
• Investor Relations Plans
,
• M&A Playbooks
• Seller/Buyer/Partner Due Diligence &
Selection (domestic and intl)
• Transaction Strategy, Negotiation
Planning & Representation
• Synergy Assessments & Checks
• Term Sheet, LOI, and MOU Drafting,
Markups & Checks
• Definitive Agreement Markups
• Post-Transaction Planning & Execution
• Transaction “Look-Backs”
• Partnership Evolution & Termination
• PMO Design, Launch & Day-to-Day Ldrship
• Organizational Design, Metrics & Incentives
• Salesforce Effectiveness
• Cost Reduction Programs
• Risk Assessments
• Corporate Communications
• Ad Hoc/Programmatic Coaching
• Interim Executive Staffing
OUR FULL SET OF CAPABILITIES

Managing Through the COVID-19 Crisis: A Guide for All Business Leaders

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