VG Wort Zählmarke

Rarely does anyone experience people and companies in such a state of emergency as those individuals involved as reorganisers and restructurers. Corporate crises often reveal the abysses, fates and characters of all parties involved.

The financial expert Ralf Ehret could write books about it. Over the past 30 years, he has helped hundreds of entrepreneurs get back on track. His career began in banking in the early 1980s. Later, he spent fourteen years as the head of major client restructuring at Hypovereinsbank in Munich and London. Since July, Ehret has been both a partner and the Head of Debt Advisory at enomyc.

For someone as passionate as Ehret, numbers are more than just mere figures: they are entire areas of tension. Sure, those between acute corporate crises and  stakeholder conflicts, financial law and operational restructuring.  However, he is much more interested in the areas of tension between chaos, despair and new beginnings.

Why? What makes good debt advisors? And how is it possible -  when your back is against the wall -  to develop the "growth mindset" that he speaks of so fondly? A conversation about problems as logical life tasks and opportunities for personal growth.

 

Mr Ehret, challenges are your business. What personal challenges have you been going through lately?

I joined enomyc in July to build up the Debt Advisory business unit. To do this, my wife and I had to move 600 kilometres -  from Kiel on the northern coast of Germany to Frankfurt. On the one hand, this is a personal departure, a change of perspective that makes us both very happy. On the other hand, it is of course a big change. It requires flexibility and organisational skills. 

You have done something like this before. In that instance, you changed sides after more than 30 years in banking. Why?

I just wanted to start something new again -  change my perspective, sharpen my view on the new needs of companies in crisis and broaden my horizons on the investor side. So I switched to private equity. I became a managing director in a Hamburg family office. That was in 2021, in the middle of the pandemic. There I built a distressed investment vehicle as a business model "from scratch". That means the business strategy, the processes, and the web presence.

"From scratch" seems to appeal to you.

Yes, in connection with my main topic "Debt Advisory", this is a very nice task. In the past, I had dealt very intensively with the individual consulting of companies on the financing side. That's why I saw an important business approach in professional debt advisory for the upper-middle class. I am now building this up for enomyc in Frankfurt. It's like having a blank slate. I'm practically redesigning everything and can contribute my experience and ideas.


At the same time, you support clients waving the red flag.  Where does it hurt the most at the moment?

I think the most sensitive area is actually securing the financing of companies. The frequent consequence of the current situation regarding the procurement crises, inflation and cost increases is an: adjustment of working capital. Some sectors are affected much more than others. Automotive and real estate, for example, but also wholesale and retail. For them, it is very difficult to generate additional capital from the traditional banking market. Ratings are dropping and earnings are falling. It is not a good time to negotiate new bank lines.

This is where you come in. You started your training in banking in the early 1980s. What exactly did you find so exciting about the lending business back then?

First and foremost, the business administration: the management of companies, the entire performance levels and value chains. But I found the carry-over even more exciting: that loans are necessary to keep companies running. That they are used to finance investments and counter-finance  normal operating resources. All the different forms of credit that exist in this field, combined with corporate banking, later became my greatest hobbyhorse. I wanted to apply this knowledge in sales, to generate added value with the customers. So the combination of credit, corporate clients and personal exchange became my professional home.

Did you already know when you were training that you would later want to advise major clients in credit transactions -  also in turnaround and restructuring processes?

Yes, I had the desire quite consistently from the beginning. After my bank training and part-time studies to become a banking specialist, I worked for a Swiss bank in Frankfurt in corporate banking. For me, Frankfurt was the centre of the financial industry at that time. There I discovered my passion for corporate banking. In 1998, I moved to Hypovereinsbank in Munich to work in large corporate restructuring, and in 2002, I moved to London to get to know the international restructuring business. In 2004, I assumed the position of Head of Large Corporate Restructuring for 14 years. From 2018, I was based in Hamburg and took over as Head of the regional restructuring units  in northern Germany, Frankfurt and Leipzig for another three years.

If you were in the position of the people you advise today, what qualities would be most important to you in a debt advisor? What are the three "go-to" qualities for you?

Integrity, resilience, affinity for conflict.

What makes you say integrity first?

Debt advisors work in a heated environment: multiple interests have to be transferred and negotiated into an implementable concept under high-pressure time constraints. Personal integrity is a basic prerequisite for this. It is what creates broad acceptance and trust at the entire stakeholder level. The job requires a lot of experience, perseverance and assertiveness. All this is reflected in personal integrity. I also mentioned high personal resilience and -  last but not least -  a certain affinity for conflict. Because, in order to solve their task, debt advisors in an exposed position will almost inevitably have to step on the toes of individuals or even several stakeholders. 

I'm sure you've done that too. After all, you have accompanied  several hundred cases -  often also as a consortium leader. Are there any stories from the last 25 years that still stick with you until today?

Only very occasionally. As a rehabilitator, I have come to know the entire range of characters in a crisis: from those who are deliberate and rational to those who are deeply emotional and choleric. From trickery, lying, cheating and threatening to entrepreneurs who emerged from the crises  like a phoenix from the ashes. As a rehabilitator, I have also been in court from time to time -  as a witness to a criminal case because clients had committed criminally relevant offences while doing business. The work becomes very difficult when the public prosecutor's office is investigating concurrently.


At the same time, it is obvious you feel quite comfortable in the area of tension between acute corporate crises, stakeholder conflicts, financial law and operational restructuring.

That is indeed the case. When I get cases where there is complete chaos -  lack of understanding, anger, lack of transparency -  I am in my element, like a skipper in a storm. With my experience and background, I quickly bring calm to the situation, direct the focus to the matter at hand, develop clear ideas and successively  open a dialogue. Chaos is often followed by despair. But it is also followed by new beginnings. I have experienced many cases of crisis in which shareholders and individual members of the management team have undergone an incredible transformation.


How did they manage that?

By developing a growth mindset.

In other words?

"Growth mindset" stands for a certain dynamic attitude towards problems and crises. Do we see problems as annoying obstacles? Or perhaps as logical tasks in life? Do we let crises slow us down? Or do we use them as an opportunity for personal growth? The entrepreneurs I just mentioned decided to grow throughout the difficult task.


How does this attitude work?

Only if you see trials and opportunities during crises. People go through entire personality developments through crises. Their values, their character, their self-confidence are put to the test. It is a learning process in which you have nothing to lose and in which you cannot fail. With this attitude, this realisation, it can succeed.


Even when your back is against the wall? How can you develop a growth mindset in the midst of a crisis?

Max Frisch said, "Crisis is a productive state. You just have to remove the flavour of disaster." I think that sums it up extremely well. One should not think of every crisis in catastrophic terms and use related, negative vocabulary. Words are very decisive and exert a great influence on the mood and our subconscious.

So first think in terms of opportunities, then take out the drama and pay attention to the wording. What else helps?

To be able to engage in a change of perspective. To do this, you have to recognise -  or rather accept -  the problematic phase or situation you are currently in. That is what makes things dynamic. Only then can growth happen. On the other hand, it is presumptuous to carry on as before. To think that one need not pursue a new approach. Crises are exceptional occurrences in business management. Problems cannot be solved in the same way as they arose.

Do you have a final tip?

I have two that are interrelated. The first is to get rid of false beliefs, i.e. "I can't do it." or "I can't manage it." It is very exhausting to get rid of these attitudes during crisis situations, especially when you would rather be running away, which is an understandably human response, but not a solution. That's why I also recommend creating an environment of people who have expertise and who can accompany you through the crisis. This grants you enormous opportunities for personal growth by facing  adversity. 

You address the environment. Does your environment also shape your way of counselling people? Your wife is a psychologist.

Psychology is always present when you work with people. In my job, I also have to assess what kind of character I am working with and how I can reach my counterpart. There is no question that I learn and profit from my wife. But in the end it remains, as I always call it, "kitchen psychology". I never studied psychology, but I am interested in it because I am interested in people. If I could not develop fun and joy when it comes to working with people, then I could not do the job of a debt advisor.

Thank you for the interview, Mr Ehret.

 

 

What questions do you have about debt advisory and successful crisis communication with financing partners? Get in touch with us! We look forward to hearing from you.

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