Esmark has been in the news recently for a failed deal to buy the state-owned Železara Smederevo Steel Works in Serbia. Bouchard says they could not come to an agreement on the working capital number, so he stepped back before closing the transaction.
After spending millions on due diligence for 11 months, it was an unacceptable risk, but he’s hopeful Esmark will be able to enter a management services agreement with the ultimate goal of acquiring the facilities by 2016.
At the same time, the company is looking at other acquisitions and deals that do have the right terms and conditions.
“If you do the working capital due diligence very well, you can manage through any other negatives that come up after post-close and the acquisition,” Bouchard says.
The idea is to come out of the blocks making money, so the employees receive a profit sharing check, which energizes an apprehensive workforce.
“You want to get the positive ball rolling inside of the company with all of the employees, so they feel a part of the Esmark organization, or whatever organization.”
Takeaways:
- Guard against market fluctuations with diversification.
- Get through difficult times by closely managing assets and inventory.
- Prior to an acquisition, analyze the inventory and working capital.
The Bouchard File:
Name: Jim Bouchard
Title: Chairman and CEO
Company: Esmark Inc.
Born: Kansas City, but I basically grew up in Chicago
Education: Bachelor’s in business administration, Loyola University Chicago
What was your first job and what did you learn from it? My first job was a test report clerk at Ryerson in Chicago when I was a senior in high school.
I learned how to load microfiche. That’s how long ago that was. I used to take test reports that were sent by the mills, and I used to sit there and put them on microfiche to store data.
Who has been the biggest influence on your life? My father. He was my hero. He was at every sporting event, every Little League event, every high school event, every college event.
He was in the steel business. He was a great father, and he was good to my mother. He was just an inspiration.
I try to take that and be like that. I try to do that with my children and my wife. I try to emulate things that he did.
How did you become the owner of the Johnstown Tomahawks? I got pulled into that by another gentleman who owned a hockey team. He was looking for a Pittsburgh or Pennsylvania presence as a minority owner, but was restricted from owning a second team by the North American Hockey League.
By that time it had already been public in Johnstown. Hockey is huge in Johnstown, and they were yearning to bring hockey back. I was caught in a difficult spot.
Johnstown is an old steel town. They’ve gone through the floods, which were basically created by a bunch of rich Pittsburgh businessmen. I felt that if I pulled out, it would be another example of Pittsburgh businessmen not standing up to their commitment to the Johnstown area.
So I continued through with it, and it’s actually been successful.
What has the experience been like? It’s totally different. You’re dealing with — I call them kids — but young men, and everything associated with that. They are all trying to realize their dreams to play higher level hockey or play pro hockey.
You’re trying to grow something and help the Johnstown community — working with the local and public officials, and the people.
I don’t want to lose a tremendous amount of money, which you can do in sports. It’s very difficult to make money in sports. So, you’re trying to do the best for the community and for the kids, and at the same time you don’t want to lose your shirt.
And you’re under a microscope. We’re the big game in town.
