One thing I’ve noticed recently about receiverships is the number of receivers getting appointed for the wrong reasons. That is not to say that many receivers are not qualified business people – I actually believe that a good many, if not most of them, are.

However, the key to a good receivership is finding the right receiver for the right business, and not just a receiver with business experience.

This may seem obvious, but frequently a less-than-appropriate receiver is selected because of the nuance of my point. Allow me to elaborate.

For an operating business you need a crisis manager who knows how to hold the operations together and to create value.

On income producing property you need a receiver who understands property management and who has experience with the particular type of property e.g. strip center, apartments, vacant land, office complex.

When there is an inadequate match between the receiver and the business it diminishes the results and the return on the bank’s investment.

Because the lender will typically fund a receivership and the associated fees, it’s particularly important that the receiver chosen be the right – and most qualified – one. Though a chosen receiver may have been successful elsewhere s/he needs to be the perfect match in order to optimize the chances of success and the bank getting a proper return.

When the alligators are biting, there isn’t time to give the receivership to just anybody. A receiver needs to know what he’s doing in the environment of the business in order to successfully complete the receivership, whether by selling the property or turning the business around.

What are your experiences with the wrong people in the right jobs?