By Nick Brown
LAS VEGAS, Feb 8 (Reuters) - Looming cuts to the federal
military budget could hurt midsize defense companies, but they
could also provide a unique opportunity for investors in
Facing sequestration-driven cuts if Congress cannot reach a
spending deal by March 1, the federal defense budget could face
drastic cuts. That means distress - and possible bankruptcy -
for medium and small producers of military products, a panel of
restructuring industry experts said on Friday.
The panel was part of the Turnaround Management
Association's annual Distressed Investing Conference in Las
Companies with unique products are too important to go out
of business, said panel member William Snyder, a principal at
"If you make some unique product that goes on a fighter jet,
the government will not let that company die," he said.
That could benefit private equity firms looking to invest in
distressed defense assets, Snyder said.
"It's a huge opportunity to go in and pick these companies
up and sell them off," he said, "but you just better be sure
you're buying the right companies."
Chris Dickerson, a partner with law firm DLA Piper, said the
federal government has been looking to hire restructuring
professionals to help advise Congress on spending cuts.
"They're looking hard to put people from this (industry)
into places in government to help restructure what's become a
bloated governmental activity," he said.
The panel was discussing how government policies could
impact the restructuring world. Other topics included government
energy policies and the Affordable Care Act, which could lead to
consolidation in the healthcare industry, Snyder predicted.
"Health insurance costs are going to rise, and there will be
downward pressure on reimbursements," he said. "Then I think
we'll see a lot of M&A activity."
Dickerson said rising healthcare costs are often a key
driver of clients' financial woes.
"I don't see this problem as one that will correct itself,"
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