The art of the turnaround

For more than two decades, Michael Heisley quietly went about building Heico Cos. LLC into a successful but low-key turnaround firm.

A small manufacturer here. A telecom company there. Heisley eventually amassed 40 companies with $1.5 billion in annual sales, yet few people knew much about the former computer industry executive.

Then he had to go buy a basketball team.

The decision in January 2000 to buy the struggling Vancouver Grizzlies thrust Heisley into the national spotlight. He vowed that he would strive to keep the professional basketball team north of the border, but a year later announced he would move the team to Memphis.

What followed was fan outrage, frivolous class action lawsuits and media criticism — par for the course whenever a professional sports team is uprooted from its home turf. The unfortunate reality, however, is that professional sports is a business, and outside of a few major markets, basketball is one of the least profitable ventures.

Heisley, as well as the team’s previous owners, knew Vancouver could not financially support the team.

"The Canadian dollar had dropped substantially," Heisley recalls. "You’re paying your players in American dollars and collecting from your fans in Canadian dollars. The franchise was losing substantial amounts of money. It became obvious to the NBA, after I had lost quite a bit the first year, that it could not make it in Vancouver."

Heisley is used to making the hard decisions, though. That’s his job. Through Loop-based Heico, he acquires smaller companies that are often either distressed or in bankruptcy. He then makes them profitable by selling off the underperforming parts, eliminating waste or creating a new management team.

None of these steps is easy or popular. If they were, every company would be doing them.

"People always say to me, ‘How do you find out what to do?’" Heisley says. "I just ask the people in the company, they know. It isn’t a secret. It’s just that nobody has the will to do it."

Unlike most turnaround artists, Heisley doesn’t sell his acquisitions as soon as he fixes them, when the potential sale price is at its peak. Rather, once the companies are part of Heico, the revenue generated helps finance future acquisitions.

Today, Heisley owns more than 40 companies within a diverse set of industries, including steel wire products, pre-engineered metal buildings, heavy equipment, telecommunications, plastics and food production.

"Most of everything we’ve touched has turned out to be successful," Heisley says. "I don’t mean to be arrogant about that, but most of them at one point have been very successful."

You can thank the Grizzlies for bringing his special talent to light.