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Distress managers

Published on Friday, 07 Sep 2012
Oliver Stratton
Photo: Berton Chang

With the global economy in a perpetual haze, a growing number of Asian companies – exporters in particular – are reaching out for help. While some simply seek extra funding, many are also in need of management assistance.

Since its launch in 1983, professional-services firm Alvarez and Marsal (A&M) has firmly positioned itself as a leading provider of such assistance. In addition to its well-established turnaround and interim-management practice, the company also offers a vast number of related services covering everything from forensic accounting to due diligence.

A&M Asia co-head Oliver Stratton, aided by his counterpart, James Dubow, is looking to expand the company’s business and headcount in the region. He explains in detail his growth and hiring plans for the year.
 
How did you get this job?
A&M were looking for somebody to take a leadership role in their business and move it more into the consulting and private-equity space. About 18 months ago they offered me what proved to be a very interesting and exciting opportunity.

Your company has a broad portfolio of services. How would you describe what A&M does?
We help businesses solve tough issues. That could mean helping a company that is in need of a turnaround and restructuring, or it could mean helping a company that isn’t in distress in more of a consulting role.

Who are best suited for providing these services?
In both those cases, you need people who understand how businesses work and who can solve problems. We largely take care of all the operational and financial aspects and bring in law firms to provide the legal expertise.

What is A&M best known for?
We’re really known for helping companies improve their bottom line. When businesses are in distress and are going through a restructuring, we can come in and help them get through it. We sometimes put in interim managers and chief restructuring officers, so our people are not just advising, but are actually making decisions on behalf of the company.

On the other hand, when working with healthy companies, we tend to be known for our focus on implementation and getting things done. Part of that is because most of our team come from industry backgrounds as opposed to being fresh graduates or MBA students. They’re typically people that have been in industry and done things in real-life, been on the front line and who wish to use those experiences in a professional-services environment.

How do you divide management duties with your co-head?
Currently Jim (Dubow) is quite involved in very hands-on roles in mainland China. As such I have more day-to-day responsibilities in terms of running the office. A lot of my time is spent on marketing and business development. But when new opportunities come up, we simply think about who has the best background and experience for the specific situation.

Jim’s background is more in restructuring. He’s also got more of a finance background than I have. So if it’s a natural fit for him, he will take the lead. If it’s more of a performance-improvement or consulting assignment, I’ll take the lead. But then again, we also have to think about how busy we are and who has sufficient time.

Do potential job candidates have to meet both yourself and Jim?
Typically we would both want to see them. The way it’s working currently, I’m taking more of a lead with the recruiting process, dealing with all the people who are applying as well as dealing with the search firms that we’re working with. But once I come across someone I think we might want to hire, I make sure they see Jim. We would then jointly make a decision as to whether to hire them.

Does turnaround management make up most of your business?
Historically, yes. That was what the company was set up to do. When I came in 18 months ago, though, it was to develop more of a performance-improvement effort, which covers revenue enhancement, supply chain and operations, finance functions, cost reduction, and helping businesses improve their bottom line.

Is the current economic climate prompting increased demand for turnaround management?
Yes. If you asked me 12 months ago what our mix of work looked like and was going to look like, I would have said it’s going to be more performance-improvement. But the market has changed and we’re seeing more situations where companies are distressed. These days we tend to be more involved with fire-fighting and helping businesses get through tough times.

Has this increased demand led to an increase in hiring?
We’re constantly on the lookout for good people at all levels. We look at everyone, from those with 10 to 15 years’ operational, consulting or finance experience, to those who are more junior that can fit in with the team. We’re also looking for people with two to three years’ experience in an accounting, investment-banking or consulting role.
While our focus is China, we are still a regional business, so people who can cover the rest of Asia are welcome as well.

In terms of business development in China, do you approach the companies you help directly?
We’re focused a lot on the private-equity sector as a channel for reaching businesses, rather than going into China and approaching companies directly. When a private-equity fund makes an investment, for example, they might need someone to do due diligence up front. We would come in and help with the commercial and operational due diligence, which is becoming increasingly important given all the issues surrounding fraud.

What are the advantages of going through a private-equity fund?
They’re doing a lot filtering for us. They’re very good at identifying good opportunities. They are also in a position to influence entrepreneurs to make changes to their business, which is often a challenge for outsiders, particularly in China.

Is that challenge a cultural phenomenon?
Absolutely. I think in Asia generally you have a lot of first- or second-generation-run family businesses where things are kept quite tight in terms of the sharing of information. There’s just less acceptance of people coming in from the outside to help.

In contrast, if you go to the US or Europe, companies are very open to bringing in outsiders. They see the value of our expertise and of being able to pay someone to come in to fix an issue and then leave it to management to keep running the business afterwards. So it’s very much a cultural factor, one that is reflective of the early stage of the market here.

How are perspectives towards business consultants changing in China today?
There has gradually been more awareness and acceptance. Much of the change is being driven by the fact that you’ve got more local executives that have worked or been educated overseas and have come back to Asia more accepting and open to different ways of doing things.

Having said that, the single most important factor in terms of gaining acceptance in this business, whether in China or elsewhere, is your ability to do a great job. You’re only ever as good as your last project.

What type of personality and soft skills do you seek in job candidates?
Clearly you’ve got to have good relationships and people skills. You also have to be a team player because we typically work in project teams.

Because we work with multiple parties – often in complicated situations involving lawyers and accountants, each representing different groups of creditors, for example –you have to be able to interact in that kind of environment.

What kind of professionals might stand a good chance of being recruited by A&M?
It’s quite mixed. Sometimes it might be someone with a CPA background who became a CFO. Others might have worked as a consultant for a while and then moved into an operating role in a business. Typically it’s people that have some hands-on operational experience within a company, ideally in China, where a lot of our work is.

For junior recruits, we’re looking for people that have had at least some experience somewhere else beforehand. We’re not hiring fresh graduates.

There are a lot of out-of-work bankers out there. Do you think there may be opportunities for them at A&M?
There are. But what we would like to see is that they’ve got those core skills that banks are known for, such as the analytics, the creativity, the finding of financial solutions. They also need to be able to translate that into a client environment where they might need to go in and play an operating role in a business.

What do you offer your staff in terms of training and development?
We have global training programmes. We recently sent some of our [Hong Kong] team to Europe and the US. We also have regional training schemes, with the next one taking place in September.

Overall, however, I’d say a lot of the learning happens on the job. You learn from people that have more experience and have been through similar situations before.

How would you describe the company culture at A&M?
It’s a very can-do, get-on-with-it culture. Meetings tend to be short and sharp. They’re more of a means to an end in terms of finding solutions and getting things done.

It’s also a very un-hierarchical culture. That’s certainly something that Jim and myself are trying to develop – a sense of personal accountability and responsibility at all levels. It’s not about waiting for your boss to tell you what to do, it’s about figuring out what to do and doing it.

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