Turnaround specialist says his 'product is me'
Specialist: John M. Collard's job, which he has done around the world, is to
turn around distressed companies, but Network Technologies presented a difficult
challenge.
By Stacey Hirsh
Sun Staff
September 8, 2002
When John M. Collard arrived at Network Technologies Group Inc., an empty desk
and chair were all that filled his office.
There was no computer. The file drawers were empty. The walls were bare.
"There was nothing here," Collard recalled.
Normal, perhaps, for a new company.
But this Baltimore business was 6 years old, and Collard had been called in to
save it.
A turnaround specialist whose job is to rescue troubled companies, Collard had
been hired by the board of Network Technologies Group to figure out what was
going on inside, to stabilize the company, and to find and hire his replacement.
"What didn't surprise me was that when I walked in it was worse than I was
led to believe," said Collard, 56, who owns Strategic Management Partners
Inc. of Annapolis and has been involved in more than 40 mergers and acquisitions. "It's
always worse than I'm led to believe."
This time was different. The job wasn't just hard. It was impossible.
From the vacant office of NTG's former chief executive, Collard discovered
something even more vacant: the numbers in company's books.
Within hours of Collard's arrival July 1, the story unraveled of a small
Baltimore company suspected of being fraught with deceit and accounting schemes.
"Let's face it, this thing just imploded," Collard said.
Distressed companies are his specialty. A 1969 graduate of Southern Illinois
University, Collard grew up north of Chicago. He began his career as a financial
analyst and went on to work for nearly a decade at Martin Marietta Corp., long
before it merged with Lockheed Corp. in 1995.
But it wasn't until after he was recruited to help Delta Data Systems of
Columbia that Collard found his calling.
He shrank the company, sold its assets and took it into bankruptcy in 1990.
"That was my first client," Collard recalled. "I just said to
myself, 'My product is me and my ability to run companies.'"
Collard's other clients have been around the globe, from San Diego to
Pennsylvania to Eastern Europe to Baltimore. He typically comes into a company
as a chief executive, deputy chief executive or as a consultant for equity
capital investors, though in the future he hopes to work for a company on the
investment side.
Patrick Jewel met Collard about two years ago when he was interviewing
candidates to take over Xcellent Ventures LLC, a troubled sportswear company in
Largo in which Jewel was a major investor.
From a fishbowl-like conference room, Jewel was running late interviewing
someone when Collard arrived for his 5:30 p.m. appointment. As he looked outside
the glass room, Jewel saw Collard standing in front of an open door with the sun
setting behind him. He had his hands on his hips and a look on his face that
said, "It's my turn," Jewel recalled.
"It was sort of like a Wild West picture with a gunslinger there,"
Jewel said.
Jewel said Collard was aggressive and reminded him of Ross Perot. Even though he
had interviewed 10 candidates for the job, Jewel said, he selected Collard right
away.
"There was no question," Jewel said. "There really wasn't even
another group of people that I felt like could do the job that he was preparing
to do for me."
Collard also helped run the Turnaround Management Association, a Chicago group
of which he was chairman of in 1995.
Members of the association said Collard was instrumental in developing a
communications program within the organization, bringing discipline to it and
keeping it growing. TMA had about 1,500 members when Collard took office there
in 1995 and now has more than 5,000.
'One of the key people'
"John was really one of the key people, in my opinion, in terms of really
energizing the group," said Martin J. McKinley, a past association chairman
who is president of Wells Fargo Business Credit Inc. in Minneapolis.
"He's thorough, he pays attention to detail, identifies good talent in
people and gives people a clear direction and then lets them have enough free
rein to accomplish what needs to be accomplished," said Tom Hays, a
turnaround specialist from outside Philadelphia who is a member of the TMA and
president of its sister organization, the Association of Certified Turnaround
Professionals.
But for a struggling company in need, Collard's help doesn't come cheap - about
$250 to $500 an hour. For that price, Collard will take control of a company and
stop the bleeding, put in a new plan for running the business and hire his
replacement.
"I'm always working myself out of a job," Collard joked.
Office is in his home
He spends much of his working hours behind the desks of other chief executives,
but Collard's desk is in the basement of his Annapolis
home, where the office overlooks a garden and a small fishpond. The office is
adorned with a boat wheel, a pillow that reads "A man's place is on his
boat," and a miniature Wilson character from the Tom Hanks movie Cast Away.
So it's no surprise that Collard likes to spend his spare time on his 33-foot
sailboat or on his Harley-Davidson motorcycle, which also is evident in
Collard's decorative office, where a Harley clock that vrooooms every hour on
the hour hangs on the wall.
But riding a Harley might be the last place to look for this gray-haired
businessman who can be seen during the week in dark suits, crisp shirts and
wire-rimmed glasses.
Recently, Collard has spent his days at 911 S. Ann St. in Fells
Point at Network Technologies Group.
A privately held company, NTG installed cable for utility and telecommunications
companies, including Comcast Corp., AT&T Corp. and MCI.
When Collard arrived in July, he replaced Michele Tobin, NTG's former chief
executive and co-founder. She could not be reached for comment for this article.
Collard said that after he began asking questions but wasn't getting the answers
he thought he should, he discovered that NTG had toyed with its books. When he
called Comcast, the company said it owed NTG about a third of what Collard
thought he would be receiving.
"Pretty soon, one thing starts coming after another," Collard said.
At 10 a.m. on his second day on the job, Collard was in a conference room with
an accounts receivable clerk and his supervisor going over paperwork. Again,
Collard's questions weren't getting answered.
Finally, the nervous clerk asked his supervisor, "'Can I tell him?'"
Collard recalled.
Collard forcefully told the clerk, "You better tell me."
NTG had overstated profits by $4 million by creating $2 million in phony
receivables invoices and by failing to list $2 million in accounts payable,
Collard was told. He said the company inflated its numbers to increase its line
of credit with Mercantile-Safe Deposit and Trust Co.
He confirmed that before he arrived, the company had deducted money from workers
paychecks for their 401(k)s but hadn't sent the money to the firm handling the
accounts. Checks that NTG had written for employee health insurance in June
bounced, so the workers were not covered, he said.
"When I asked them, 'Why did you do this?' they said, 'We were told
to,'" Collard said.
Collard called NTG's accountants, Ellin & Tucker, Chartered of Baltimore, to
double-check his findings, and the story continued to unfold.
Collard had seen troubled companies before, but he said he had never uncovered
fraud to this extent.
Though the situation at companies is typically worse than he is led to believe,
"the fact that it was this bad was a surprise," Collard said.
NTG closed July 12, and its 125 workers lost their jobs.
Possible investigations
The FBI and the state attorney general's criminal investigation division are
thought to be investigating the company.
Collard said he could have saved the company had NTG's board hired him sooner.
By the time he got there in July, it was too late, he said. So Collard closed
the company and auctioned off its assets late last month, raising more than
$750,000 to go to the bank.
That money won't cover the bank's losses, Collard said. And NTG's former
employees will never see their last three weeks of pay.
"Imagine when you go home Friday night and you don't know how you can make
that payroll for 125 people," Collard said. "And unless there's a
miracle you can't, and at NTG you couldn't."
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The final auction of all assets of the former Network Technologies Group, Inc.
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