By the time Peter Miragliotta discovered the true depths of his company’s financial troubles, Tenable Protective Services was nearly a quarter of a million dollars in debt to the IRS.
To make matters worse, Miragliotta’s business partner of six years was the one who had slowly and silently drained the company’s coffers since he merged his firm with Tenable in 1988.
But Miragliotta’s attempts to oust his less than scrupulous business associate only intensified the battle and fed rumors that the security company was on the verge of collapse.
“I started trying to get rid of him in many different ways,” explains Miragliotta, who declines to identify his former partner by name. “But, the more and more I did, the more he tried to get rid of me in many different ways. He went to some of the other associates and said, ‘It’s time to buy Pete out, Pete’s losing his mind, we need to get rid of him.'”
In December 1993, Miragliotta fired off a five-page letter to his partner, outlining a variety of options he could exercise in disassociating himself from Tenable. It wasn’t until the following April that he was finally able to wrestle away control of the business in exchange for clearing his partner of any debts he had incurred during his six years handling the company’s finances.
Still, the deal didn’t go off without a hitch. Miragliotta says his partner stole much of the firm’s computer hardware, trashed company records and put off the signing of the settlement agreement for a week to snag an extra $7,000 of Tenable’s cash that he needed to cover payroll for his employees.
Nevertheless, Miragliotta was happy to wash the 6-year-old failed merger from his hands. The only problem left, and probably the biggest, was that the IRS wanted its money immediately.
“Although I didn’t sign anything or touch any of the financials, the way they looked at it is, you’re still in business,” says Miragliotta, who adds that the company was having a hard enough time being profitable, let alone to be facing such a huge debt. “They held us responsible for a quarter million in back taxes and we had to go to court and beg for time.”
Although many had advised him to simply declare bankruptcy, fold the tent and go home, Miragliotta — a retired Cleveland police officer — wanted to stand and fight. Today, six years after standing at the crossroads, Tenable boasts $10 million in annual revenue and handles security for the Cleveland Browns, Cleveland Indians, Blossom Music Center and a variety of other entertainment spots around the city.
Here’s how he guided his firm through the rough times and turned around a company that was on a collision course with disaster.
Even if he had let his company declare bankruptcy to avert the crushing back taxes owed to the IRS, Miragliotta would not have escaped the messy situation unscathed.
If he jettisoned Tenable Protective Services, he would still be personally responsible for $92,000 in back taxes to the IRS, a prospect he found even riskier and more frightening than trying to keep his company afloat with a $250,000 debt.
“They just wanted to shut us down and put a lien against me, which would have left me nowhere,” he explains. “I wasn’t a policeman anymore. All I had was a pension. I would have been broke. I had nothing, so we had to go to tax court to fight for time.”
When the courts granted Miragliotta a small reprieve, he pulled on board a new financial officer who quickly mapped out a business plan for repayment of the quarter million dollar debt. Since annual revenue was somewhere around $800,000, a deal was reached in which Tenable would pay back at least $70,000 in back taxes to the IRS each year.
The company’s new financial officer reconstructed the business around that plan.
“He put together a financial plan and I guess you could say it was from the bottom up,” explains Miragliotta. “We had to make that much in profit and then work backwards. So we came into the office every day, got as much administrative work done as we could and then went out and worked jobs, so we were covering billable hours and staying on our business plan and working with the banks.”
Taking control of the business was a brutal fight for Miragliotta, but it turned out all his business partner really wanted was to clear his name financially.
Specifically, he was worried about the $150,000 line of credit that had gone without payment and had ballooned to $158,000. Knowing it would be a solid way to oust his partner, Miragliotta went to the bank to try to work out some sort of payback arrangement.
“This banker knew what a snake and worm he was and she understood our plight and our dilemma,” says Miragliotta.
However, the best deal he could assemble was one that required Tenable to immediately pay down $30,000 on the credit line. It forced Miragliotta and his management team to get creative.
“We all went out and borrowed money from our in-laws, we put up our paychecks, we hawked guns, we sold coins,” he says. “We did everything we could.”
It was a grassroots way to raise the necessary cash, but it is a form of sacrifice that was not uncommon during Tenable’s turnaround. To ensure the company would have the $70,000 in profit to pay back the IRS during that first crucial year, managers’ salaries were based upon only what each member of the team needed to pay bills and simply survive.
“We figured out everything that we needed to live and nothing more,” explains Miragliotta, who says salaries were figured out during routine manager meetings. “As a matter of fact, if we caught any of the handful of managers at the time living over their means, they had to answer to the rest of us, because we were all in the same boat and that’s how we had to look at it.”
The shake-up inside Tenable’s walls was fertile ground for the rumor mill. Competitors had written the company off and were not shy about telling those looking for security services about the strife within the company.
Public records of court proceedings made the difficult times public knowledge. It was a development that forced Miragliotta to make moves to protect the relationships he had forged with his customer base by tackling the issue head on without flinching.
“My competitors said I was out of business, I was dead,” he says. “I went to every client we had, top to bottom, and put my cards on the table. I said, ‘You’re going to hear things, but if you give me the opportunity, I will continue to deliver you superior service and always will.'”
The hard-nosed attitude worked. Longstanding accounts like Cleveland’s IX Center and The Flats’ Nautica Entertainment complex continued without a hitch and are still among the accounts Tenable’s staff of 3,000 serves today. A year later, the City of Cleveland saw the opening of a new major league ballpark, and despite the internal strife, Tenable landed the contract to provide security and nonsecurity event personnel for the facility.
In fact, Miragliotta gauges his long-term success today by the number of big-name accounts that stuck with the company through the hard times.
On average, an entertainment venue swaps security companies about every three or four years of service. Luckily, those industry statistics haven’t affected Tenable.
“I take great pride in accounts like the IX Center, having been with them for 11 years,” he says. “That’s unprecedented. I’ve had Nautica Entertainment 12 years and I’ve been involved in about 17 Grand Prix races, and I’ve done it by going out to every single client and talking to them.”
Even when the darkness started to give for Tenable, it was no time to get loose with money.
As revenue rolled in, the company’s CFO demanded each capital purchase be carefully weighed. If the management team decided to lease another vehicle, for example, it was mandatory that the number of billable hours be increased accordingly.
Although it may seem like an unusual way to equip a business, Miragliotta says it was the way the company operated between 1994 and 1997. It was a decision that he says was probably one of the biggest drivers of the company’s growth.
“Any time we wanted anything, we considered it a perk, even if it was absolutely essential,” he says. “If you wanted a new computer, we figured out what it would cost and we computed through an amount of security hours for an account. So, if you want a computer, I need an account that’s around 50 hours a week.”
Eventually, the ghost of hard financial times melted away. Today, the company operates several divisions and Tenable’s event staff has grown from a mere 50 in 1994 to an impressive count of more than 3,000 today.
Looking back, Miragliotta says he believes it is his background as a police officer and his seven years in the Marine Corps that fed his fighting spirit during even the hardest times. Put quite simply, he decided he wasn’t going to lose.
“I just can’t quit,” he says. “Nothing makes you feel any better than winning. I love to win and hate to lose.
“I despise losing. I don’t even like to say the word.” How to reach: Tenable Protective Services, (216) 361-0002
Jim Vickers ([email protected])is an associate editor at SBN.
