Bob Cohen tends to see people at their most stressful moments.
The Akron-based turnaround consultant once presented a business pitch to a troubled retailing company. A year and a half passed, and no word. Then, he gets a panicked call from the owner, telling him that payroll is due on Friday, and they’re going to miss it by 90 percent. Can you come right away to help?
A lack of communication and deep denial of their troubled situations are the classic hallmarks of companies in trouble. But it can get even worse, says Cohen, founder of Centrus Consulting, which recently merged with a New York/Philadelphia practice to form Nachman-Hays-Centrus Inc.
“I always watch for when a client moves from denial to the next stage: blame. When you find a client is into blame, they’re probably beyond turnaround.”
What’s the difference between turnaround artists and general business consultants?
“As a general rule, a consultant goes in and asks, ‘How do we make this business better?’ A turnaround guy asks, ‘Is there a core business here?’ That’s a key difference.”
Beyond that, the immediate priorities are assessing the adequacy of the management already in place and figuring out if there’s some form of bridge financing to buy time to fix the problems.
Sometimes, of course, they’re not worth fixing. In more than half his engagements, Cohen winds up overseeing the sale of the company. Some are simply liquidated, with the turnaround consultant focused on trying to squeezing as much debt out of the business as possible.
In this business, there are few routine assignments. A bank once hired him to try to get its money back from a troubled fireworks company in this area.
“We did some homework and found out the owner liked to punch people’s lights out. So we showed up with five armed guards, [with guns] fully loaded, and went after the cash register. He was going to punch our lights out, too, until he looked out the window.”
Of course, the cash register didn’t contain the full $4 million the bank was seeking, so it had to file suit in Stark County court, as well.
As you might expect, it helps to have a loose and easy demeanor in this line of work. And Cohen, who once borrowed heavily to buy a six-figure seat on the Chicago Board of Trade at the age of 22, indeed has something of a cowboy reputation. He recalls once literally roaring into an engagement, overseeing a troubled coal mine in central Ohio’s Amish region, aboard his Harley Davidson.
Every troubled company is different and every owner of a distressed property has his or her quirks, but they all have one thing in common, he says.
“The owners are concerned that the employees will find out, but the employees already know. And them thinking that they don’t want anyone to know is a kind of joke, ’cause everyone knows.”
John Ettorre ([email protected]) is a contributing editor at SBN.
