Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
HOW TO TURN AROUND YOUR DISTRESSED COMPANY
06 :: Watch out for the bad actors
by Andrew Tellijohn
WHETHER IT'S TURNAROUND MANAGEMENT, filing bankruptcy or providing accounting advice, there are many bad apples masquerading as experts in their respective fields. And when you are taking the time and money to fix your company?s misfortunes, that isn?t the time to run across those people. So it?s extremely important to find reputable people to help you through the work.
First, realize you are going to have to spend some money. It?s your one shot to turn around so it?s not an opportunity to be cheap. You?ll need some interim financing in order to make sure you can pay the right people.
If possible, you want to find someone who has plenty of experience working with turnarounds. Some experts work five or six a year and have been in the business for 15 or 20 years. You?ll also want to search for someone who has experience working with companies in your industry.
Once again, use the people in your inner circle. Bankers, turnaround people, lawyers and accountants know each other. They should be able to provide you with the names of specialists they are familiar with from previous deals. If they can?t, the Turnaround Management Association is one of the nation?s most respected organizations in this area. That will give you a starting point.
Once you have a list of potential turnaround partners, interview them. Talk with them about your industry and ask them for references of clients they have worked with in the past. If they can?t provide you with case studies you probably don?t want to work with them. They should be used to the question. Most business in this industry is garnered through referrals.
Also ask them to give you a sense of what they would plan to do, how they would achieve it and an estimate of the cost. Then you?ll have an idea what they would do and how much it will cost so you can do some educated comparison shopping.
Finally, don?t be fooled by alphabets either. There are a lot of certifications that CPAs, lawyers, MBAs and bankers can get in an attempt to make their credentials more impressive. That?s not to say they are the wrong people to pursue, but often all those require is reading a book and passing a test. Seek out the people with actual experience and success.
It turns out the turnaround industry is a tightknit one. Many times bankers work with a small number of asset-based lenders, for example, when a loan goes into default, and will turn to these same players again and again.
The same is true for attorneys and accountants who specialize in turnaround management. Those service providers spend a lot of time developing relationships with others in their industry, so they will gain referrals when the time comes.
Reputations matter in the business as well. If you have a formidable bankruptcy attorney, for example, whose name is well-known and respected in local circles and in the courtrooms where your case will be heard, you will fare better than with an unknown.
So part of your homework should be looking through situations from the past, detailed in the media, in court records or in industry and business groups, and looking for names that commonly appear.
But don?t go by reputation alone. Talk to business owners who?ve worked with the person; talk with service providers who?ve done so. Talk to the person yourself, and make sure you are comfortable with his or her style and approach. You?ll be spending a lot of time and money with these advisers, so you need people who will do things in a way that feels right to you.
CHECKLIST
? References, references, references.
? Get names of people to talk with from bankers, accountants and others in your inner circle.
? Have the people you interview work out an inexpensive basic assessment of the way they would achieve your turnaround goals.
? Don?t be fooled by alphabet soup. People with several certifications might be the right resources to help you out, but don?t rely on those alone.
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
