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.
by Beth Ewen
The demise of a Los Angeles vendor management company, Axium International, and its local payment service, Essential Chimes, has left hundreds of Twin Cities technology and other consulting firms without payment for services rendered in the last few months of last year.
Axium filed for Chapter 7 bankruptcy on Jan. 8. Axium and Chimes managed subcontractors for large corporations such as UnitedHealth Group and Northwest Airlines. The consulting firms, in turn, did work for those large corporations via Axium.
In many cases the large corporations paid Axium/Chimes for the subcontractors work, but that money is now tied up in bankruptcy court and never made it to the consulting firms.
It will put half of the firms like ours out of business, says Kirk Hoaglund, CEO of Minneapolis I.T. consulting firm Clientek.
His says his firm was out about $500,000 for work performed at its largest customer, UnitedHealth Group, during November and December. There aren’t many small firms that can float half a million dollars, he says.
At first he thought he?d have to close shop, he says. But he says he’s been treated exceptionally well by UnitedHealth, where a procurement executive began calling personally every few days to work out payment.
One of my biggest worries was that the big company couldn’t move fast enough for us. Small firms like ours live and die on cash flow, Hoaglund says. Glitches hit the flow fast and we have very few resources with which to absorb them. UHG acted fast enough so that we survived this huge hit. I can’t say enough about how well we were treated.
Ken Olsen, CEO of Dahl Consulting in St. Paul, says the Chimes bankruptcy was totally out of the blue. It was one of those black Mondays.
We were out a full month of billable time in revenue, with a single client. It looks like we won’t be able to recover the money. They feel they’ve paid Chimes, so sorry, we can’t pay you again.
Olsen says he disagrees with that stance, but it’s difficult to beat up on the client because his firm wants to continue to get work. He says his firm’s loss is in the hundreds of thousands of dollars; annual revenue at Dahl is more than $50 million. Olsen says hundreds of such firms were affected locally, and we’re talking millions and millions of dollars.
On the lucky side for us we are a little bigger firm than some, so Dahl Consulting can absorb the loss better than some as well. We look at it like money that was stolen from us. It takes a long time to recoup, he says.
Dahl was also affected because it, too, has a vendor management service, so potential customers might point to the Chimes bankruptcy as a reason to stay away from such services. When I talk to my potential vendor management clients, I say, make sure that whoever they select maintains a financial guarantee bond, he says.
A buyer is reportedly being sought for Axium, according to court-appointed trustee Howard Ehrenberg. Meanwhile other vendor management companies are advertising on the Web to help transition Chimes customers, including Synergy Services, Allegis Group Services, and Secure Talent.
Kirk Hoaglund, Clientek: 612.379.1440; ki***********@******ek.com; www.clientek.com. Ken Olsen, Dahl Consulting: 651.772.9225; ke*@************ng.com; www.dahlconsulting.com
