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Top 12 Outstanding Turnaround Management Firms for 1995 SMP Among the Best! AGAIN! |
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Strategic Management Partners
A nationally recognized turnaround management firm
specializing in interim executive leadership, asset recovery,
and investing in underperforming troubled companies.
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by Debra Brennan
While it is always difficult to narrow down a list of top turnaround management firms to just 12, this year's choices were particularly competitive. The turnaround management industry has become increasingly professional and the results of many turnaround situations have been particularly successful. Also, there are many creative business and financial plans being implemented and of course there has been no shortage of needy turnaround opportunities.
While some large firms such as Jay Alix & Associates, Glass &
Associates, Nachman Hays Associates have maintained their successes and
built on strengths from previous years, and therefore remain on our list,
we have some additions to the list with some interesting and novel turnaround
management expertise.
Chrysalis Management Group was financial advisor to GE Capital, holder
of $800 million in debt from the Broadway Stores, Inc., a retailer with
more than 80 stores throughout the southwestern states. The engagement
concluded with the successful purchase of Broadway Stores by Federated
Department Stores.
Representing a group of secured lenders, Nightingale & Associates
analyzed causes of fleet failure of Adriatic Holding Corp LTC/Adriatic
Tanker Corp., the largest (100 ship) fleet failure in shipping history.
Allomet Partners, with new offices in Cleveland, Ohio, Richmond, Virginia,
and Chattanooga, Tennessee, has increased its senior staff by 60 percent.
Allomet successfully analyzed the operation of a $20 million composite
specialties producer.
Brincko Associates, Inc. continued and completed the successful turnaround
and cash flow improvement of Sun World International, and John Brincko
has been hired recently to aid Barney's in its new restructuring efforts.
William A. Brandt of Development Specialists, Inc. continues to be involved
in more "cutting edge" reorganizations, and members of his firm continue
to be at the forefront of the bankruptcy reform debate. In addition to
its work for Southeast Banking, Pittsburgh Food and Beverage, HomeFed this
firm is also committed to a strong participation in academic seminars.
Jay Alix Associates remains the strongest industry leader with 9 new
professionals, and professionals serving as CEO, COO or CFO in 7 simultaneous
engagements. Larry Ramaekers was named president of Color Tile, lending
new credibility to a retailer which had lost industry and financial support.
While these Top 12 turnaround firms have caught our eye
for a variety of reasons, including their accomplishments, there were many
worthy firms we considered, and we look forward to another year full of
inspired turnaround management, driven by these forceful personalities.
More than 200 turnaround management and consulting firms were considered
during the selection process about work completed in 1995. t&w created
a short list of firms they considered outstanding in their achievements.
We weren't only interested in the established or larger firms, instead
we wanted to emphasize superlative work and diverse accomplishments in
the industry. t&w's criteria included: achievement; growth; work in
special situations; entry into new markets; and international expansion.
Strategic Management Partners is a transition management firm specializing
in valuation enhancement, corporate renewal, strategic repositioning, and
equity investing. Collard sees this move as a first of perhaps many that
will advise investors both in the US and overseas on the successful entry
into new markets. "Turnaround Management is a popular phenomenon and there
is a formula to success. When you provide a quality management team; a
viable product with market definition to meet a customer need and a penetration
strategy that makes sense, the investment will come," said Collard.
Several strengths and abilities lead to this win according to Collard.
This team of professionals are leading experts in the fields of hands-on
turnaround management [Certified Turnaround Professionals]; managing troubled
portfolios that returned multiples of 3x in distressed situations; acquisition,
merger, divestiture experience (totaling 80 transactions, $1.2 Billion
value, and recovering $200M Assets); and unique experience with successful
conversion of US contractors who wanted to convert to commercial and international
markets.
Collard went on to say, "Turnaround problems in this part of the world
are much different than we normally think of. We teach professionals how
to be managers and how to market. In Russia, the ultimate demand economy
for the last fifty years, managers have not had to use, nor have they been
taught either skill. Teaching them is one answer, but the process will
take time. "
"The concept of value is quite different. Valuation using 'liquidation'
or 'net asset' concepts is assigned to assets. In a demand economy, inflationary
accounting writes up assets to increase collateral for additional funding,
value on the books is usually overstated. Business people are schooled
in DCF and other methods of applying value. What most miss completely;
however, is the concept of 'operating assets value', [the ability of the
company to produce profits and cash flow]. There is little application
of the concept of producing value for what investors or buyers are willing
to pay," Collard said. This will change as time passes, stock exchanges
mature, and transactions become more prevalent in the region. Until then,
negotiations will be difficult.
t&w asked what's next? Collard said, "We are raising a fund to invest
in equity situations where we take control. There is supply of capital
looking for quality deals. We can bring caliber management to make a difference
and maximize returns."
John Collard of Strategic Management Partners, Inc., teamed with the
Hiram L. Pettyjohn Company to provide services in the Central European
market, in addition to activities in the U.S. The purpose of the joint
venture is to advise investors on transactions, raise a fund to provide
capital to invest in turnaround situations, provide turnaround management
expertise to troubled or nonprivatized companies, and to advise governments,
company leaders, and fund managers on privatization and successful turnaround
activities.
The venture bid and won the Slovene Special Restructuring Programme,
which includes managing an asset management fund totaling $80 million,
and management of unsuccessful privatization and turn-around efforts. This
venture is in essence an industrial holding company that will invest in
companies, serve on their boards, provide critical direction and exit strategies,
and sell the revived companies.
Slovenia is part of the former Yugoslavia, and prior to Yugoslavia breaking
up it had eight percent of the population and 30 percent of the GNP. This
program is sponsored by the Slovenian Government, banks in Slovenia with
troubled portfolios, and the European Bank for Reconstruction and Development
(EBRD). The goal is to maximize the value of these investments by injecting
capital, management, marketing and strategic expertise into the enterprise,
and generating return of the principal plus capital gain to the Slovene
government, banks, investors, EBRD, the equity holders and stakeholders
upon the sale of these enterprises.
Negotiation of the contract is complete and the project is underway.
Collard's unique experience with successful conversions of contractors
who have been providing services and products to the U.S. government and
have converted to commercial and international markets led to his ability
to undertake this project. Many of the companies in Central Europe were
once defense-based factories that now need to convert to peacetime markets.
According to Collard, "Managing the resources to achieve successful turnaround
was most important to the win."
Collard also entered into a contract with The World Bank to advise on
privatization and turnaround activities and to develop a course to train
turnaround, bankruptcy and privatization professionals and government officials
in the Russian Federation and Central Europe. The course brings an understanding
of western turnaround management and equity investing techniques to managers
who have not had to deal with these issues before. The course was given
in Moscow, and is scheduled to be given in 8 to
Collard spent four days fact-finding in Moscow visiting with the heads
of the Bankruptcy Agency, the Agency for Privatization, multiple local
Big Six offices with practices in the region, and several troubled enterprises.
"What an awakening. We found that the bankruptcy laws have no teeth,
they are rarely enforced. Besides, many laws in this part of the world
change from year to year, or can be interpreted as the local officials
see fit," said Collard. "Because the equity holders (often the banks or
government having major shares) are responsible for the debts, managers
have little or no responsibility for their actions. They can do what they
like, are often not held accountable and cannot (or with much difficulty)
be replaced. It is a tough situation to enter a turnaround when a fundamental
of our western strategy is to build, or replace if required, a qualified
and responsible management team to carry out the turnaround. Everyone is
willing to talk about change, yet they indicate that they can only change
if the law allows it so."
Reprinted with permission. Turnaround & Workouts magazine 1995. Copyright 1995, Strategic Management Partners, Inc.
We welcome constructive inquires. More information is available if required. There is more to Strategic Management Partner's
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John M. Collard, Chairman We serve as experts for comment or quote, please contact us at 410-263-9100
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Copyright © 1995-2008
Strategic Management Partners, Inc.
John Collard, chairman of Strategic Management Partners,
Inc., while operating a small independent company, has been lending his
unique expertise to The World Bank and EBRD, and has made a novel contribution
to the industry by impacting turnaround management education and consulting
in Central Europe and the Russian Federation. Additionally, he is a special
advisor to and co-manager of Slovene Special Restructuring Programme, an
$80M equity privatization fund that he helped raise. He plans to expand
his practice by raising a turnaround venture capital fund in the U.S.
t&w went on to say . . .
Turnarounds and Investing in Slovenia and Russia
Strategic Management Partners Raises $80M Fund, Lends Expertise
by Debra Brennan
10 locations throughout the Russian Federation and former Soviet Union.
Contact Information
Strategic Management Partners, Inc.
522 Horn Point Drive
Annapolis, Maryland [MD] 21403
Voice 410-263-9100 Facsimile 410-263-6094 E-Mail Strategist@aol.com
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