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Published in Economic Development

Market unpredictability leads Gun Lake Investments to boost due diligence, forecasting

BY Wednesday, December 28, 2022 11:31am

As tribally owned Gun Lake Investments dives into planning for a massive redevelopment project along U.S. 131 north of Gun Lake Casino, the non-gaming investment arm of the Match-E-Be-Nash-She-Wish Band of Pottawatomi, or Gun Lake Tribe, also is revisiting its overall strategic plan. CEO Monica King said emerging market forces could spur GLI to consider different kinds of deals in the years ahead. 

With GLI deep into planning for the U.S. 131 corridor project, how does that affect your outlook for 2023? 

Monica King COURTESY PHOTO

For us, it’s going to be a big balance. We’re real heavy with planning right now, and we’re going to extend that into 2023 and have to focus on the development plan for the corridor. We’re also revisiting our strategic planning with our investments, given where the market’s at and making sure we balance our traditional investment strategy with this new huge task with the corridor. We really want to make sure that we are true to our mission for long-term sustainability for the tribe, and that includes diversification with our investment portfolio. … We still have to be really responsible to make sure that our portfolio is stable.

How does the broader macroeconomic outlook influence some of the discussions you’re having internally at GLI? 

That affects it a lot. I’ve been saying to the team: The only thing I’m really comfortable predicting is that the market’s probably going to remain unpredictable for a while. We’re not seeing a lot of signs of stabilization. We’re getting a lot of requests to see if we’re interested in turnarounds or restructuring. That concerns me a little because it seems like that’s been a little heavier lately. Traditionally, we’ve stayed away from those types of deals, but it’s forcing us to look at things a little differently. That’s not to say that we’re going to jump all in there or even jump in there, but you have to look at where the opportunities are. There’s a lot of good companies out there that just get themselves into trouble for a variety of reasons.

What are you having to do differently when it comes to M&A and other deals? 

We’re putting some extra emphasis on forecasting. We try to vet it a little more and bounce it against the unpredictability of the market and a variety of scenarios. It also makes us (look at) the people. The leadership that you have in place to weather something like this is crucial. We tend to start with people when we look at acquisitions and if there’s not a fit or an alignment there, we move on. But just in general, (we’re focusing on) due diligence and understanding how we can add value perhaps to help weather the storm or provide stability.

Does the emergence of distressed deals change that due diligence process at all? 

I am a strong believer that operations due diligence is just as important as financial due diligence and legal due diligence because operational due diligence is more about looking forward, the playbook of what you need to do prior to the deal closing, during the integration period, and then throughout the transition. With what we’re dealing with right now with the market, it’s really important to jump into that because during that operational due diligence, that’s also where you start working on strategic planning. You’re getting to know everybody, you’re getting to know the leadership team, and you really can hit the ground running. You have that awareness so you can adapt much, much more quickly.

While GLI’s tribal ownership affords you the ability to self-finance deals, do rising interest rates affect your deal outlook?  

It does. Of course, they impact our financial models and our valuations, but we are also able to help our internal portfolio or structure deals a little differently where we can add value throughout that turmoil, too.

As GLI kicks off a six-month planning process for the U.S. 131 corridor project, how do you see that becoming more visible in 2023? 

We would really love to break ground on some shovel-ready pieces of the property that we have on the north end and you’ll probably see some activities more south with our utilities development. It’s really exciting because the tribe is developing their own systems, and that is going to help us accelerate any other development we do along the corridor using our own utility. It’s going to be a balance of what we have shovel-ready to the north versus how fast we can get the utilities up and running. You’ll see a lot of work on that end with utilities and we’re really excited because we’ve got a pretty significant piece of property that we’re really focusing on at the Wayland exit, so that’ll be pretty visible too.

What’s keeping you focused on moving such a major project forward? 

It’s just the sheer excitement of it all. For example, as I’m driving north on 131 through that stretch, I’m looking at just the sheer quantity of opportunity for development and I break out almost into a cold sweat every time. It’s a very exciting thing. It’s overwhelming and it’s slightly terrifying because it’s so important just to get this all kicked off right. I don’t want to rush through this because it’s such a long-term thing, and it’s so important to the community and to the tribe.

Read 1648 times Last modified on Friday, 06 January 2023 14:23
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