M&As Offer Big Opportunity for Supply Chain Leaders

05.08.12

Merger and acquisition activity is set to be a prominent driver of growth for many businesses in the next few years. The upshot for supply chain chiefs in those companies: a fresh chance to produce significant shareholder value. Yet, post-merger supply chain integration has been found wanting in the past. This deconstruction of the M&A process shows how supply chain leaders can step up to the challenge. By Foster Finley and John Bonno.

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FCPA Compliance: Don't Blow Your Budget Just Yet

03.29.12

Forbes Business: FCPA enforcement has long been considered a cash cow for the Department of Justice.  It should not be a surprise, therefore, that complying with the FCPA and other anti-corruption laws comes with its own hefty price tag. 

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Mapping retail's challenging lanscape

03.29.12

Retail Week: Pippa Wicks comments: Successful retailers are those who carefully and constantly watch how their consumer markets are changing and work out how best to respond to those changes – whether through changing formats, categories, locations, or channels...

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GM Will Remain Car Sales Leader, AlixPartners Says

02.10.12

Bloomberg: Ivo Naumann, Shanghai-based managing director at consulting company AlixPartners, talks about the global auto industry. He speaks with John Dawson on Bloomberg Television's "On the Move Asia."

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Carmaking: in the slow lane

02.02.12

Financial Times: A sector long seen as an engine of European industry looks increasingly shaky.

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Making a Federal Case Out of State Sales Taxes by Marc Landy

02.01.12

Board Member: When it comes to jurisdiction over sales taxes, most of us think in terms of state taxes, rather than federal taxes. Yet, as enforcement by the Securities and Exchange Commission earlier this year and the recent debate over the collection of state sales taxes from Internet retailers have shown, these taxes can quickly become a federal issue for public companies.

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A Quick Comment from AlixPartners

01.24.12

On Wednesday The Wall Street Journal reported the World Bank has revised downward its expectations for growth in 2012 ("World Bank Lowers Growth Forecast"). Growth estimates for developed countries were cut nearly in half, from 2.7% to 1.4%. And the bank suggested growth could sink to even lower levels if financial market access is denied to just a few euro-zone countries.

In either scenario, growth will be difficult for the next twelve months, as it has been for a couple of years. Businesses that have survived the storm have done so largely through cost reductions or full-on restructurings. The remaining challenge: growing the top line in a low growth economy.

We think pricing is a critical lever to address in this environment.

Our real-world experience confirms prices are not always perfectly aligned with supply and demand and, far too often, companies' poor pricing results in missed opportunities and lost revenue. Setting the right prices and fully realizing those price points requires powerful analytics, metrics and discipline. AlixPartners combines a unique blend of strategic thinking and tactical execution to identify specific opportunities where our clients can improve pricing to maximize revenue—in a matter of weeks, not months.

Contact us to learn how you can improve price to grow the top line and see the results in next quarter's earnings report.

David Garfield, Managing Director
Karl Roberts, Managing Director
Mike Sinoway, Managing Director

fyi@alixpartners.com
www.alixpartners.com

A Quick Comment from AlixPartners

01.10.12

Greetings and Happy New Year!

On Friday The Wall Street Journal, reporting on recent changes in the private equity landscape ("Private-Equity Firms Forced to Evolve"), highlighted the twin pressures of lower leverage and higher prices paid on PE deals in 2011, both of which drive down returns. And returns may get worse if firms succumb to pressure and overpay on future deals in an effort to deploy the nearly $500 billion they hold in dry powder.

As a result, private equity firms are increasingly focusing on fixing the companies they already own by improving operations and driving growth. For some, this means expanding executive teams to better address operational challenges internally. This approach has its merits, but also presents challenges and complications— not to mention increased overhead. Fixing problems in portfolio companies typically requires deep industry experience, and acquiring that knowledge and expertise can be a very expensive way to address a short-term problem.

Instead of increasing headcount and overhead, consider engaging AlixPartners to identify the root causes of problems and implement solutions. We have a long track record of helping PE firms increase the equity in their portfolio companies. And our engagements typically last weeks, not months. We deploy small teams, usually two or three seasoned industry veterans, to quickly assess areas ripe for improvement in the short and medium term— and the result is quantified improvement in EBITDA. From cost containment to revenue optimization, AlixPartners can help.

Call on us if you have a portfolio company failing to live up to expectations. Or visit our web site to learn more about the ways AlixPartners delivers value to private equity portfolio companies.

Jay Marshall
Head of Strategy and Business Development

www.alixpartners.com

Holiday Discounts Bite Retailers

01.10.12

The Seattle Times: Bottom line took back seat to sales; Jolly December for Costco, Nordstrom

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Was it a Happy Holiday Season for Retailers?

12.28.11

AlixPartners Retail Practice Director Tom Clarke on whether retailers had a successful holiday season.

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Bailur Says U.K. Stores Face `Extremely Bleak' Outlook on BloombergNews

12.16.11

Sanjay Bailur, a managing director at consulting firm AlixPartners LLP, discusses the prospects for U.K. stores after retail sales fell more than economists forecast in November. He talks with Maryam Nemazee on Bloomberg Television's "The Pulse."

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GCC faces threat of chemicals glut

12.15.11

 Massive expansion projects will sharply boost the petrochemicals output capacity in Gulf hydrocarbon producers and this will ally with a possible slowdown in demand to result in a large surplus, a global business consulting firm said.

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Global Manufacturing Activity Stalls Across Europe & Asia

12.02.11

(Dec. 2)  Ivo Naumann was just featured on CNBC today discussing key points from Steven Mauer’s newly released 2011 U.S. Manufacturing-Outsourcing Index study, as it relates to China’s manufacturing – which has contracted for the first time in three years. Source: CNBC Video

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U.S. Economy, Federal Reserve Monetary Policy

12.01.11

Dec. 2 (Bloomberg) -- Albert Koch, vice chairman of AlixPartners LLP, talks about the U.S. economy and Federal Reserve monetary policy. Koch speaks with Susan Li, John Dawson, Angie Lau, David Ingles and Zeb Eckert on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

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Can I make more money by cutting margins and increasing market share?

11.25.11

 RetailWeek Q&A with AlixPartners' director Dan Murphy.

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AlixPartners' Etlin on Amend and Extend via The Deal

11.25.11

In this video interview with The Deal Pipeline, Felder Etlin, who headed the wind-down of Borders Group Inc., discusses the lack of cash on hand for private equity firms that own middle-market companies.

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Mitek: How To Play The Global Banking Boom

11.02.11

Commentary on the RDC study conducted by Mitek & AlixPartners on SeekingAlpha.com.

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US Shoppers Won't Get a Break from Cotton Price Dip

10.25.11

Oct 25 (Reuters) David Bassuk estimates that retailers were at best able to pass off half of their higher costs to shoppers, sharing the hit to margins with suppliers for the rest.

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More due diligence amid economic uncertainty

10.20.11

Oct 20 (The Deal Pipeline) 'The more you think about -- or have some trepidation about -- the market, the more you sharpen your pencil,' says AlixPartners' Steve Deedy in this video interview about due diligence with The Deal magazine.

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Harrisburg goes local in tapping bankruptcy lawyer

10.19.11

Oct 19 (MSNBC) According to Alan Holtz, many struggling cities are reluctant to ask for turnaround help. "There's a difference between a market need and a demand," Holtz said. "There may be a need in the municipal market right now, but we just haven't seen the demand.

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CFO Pinch Hitters

10.12.11

Demand grows for temp finance chiefs who can jump in to help companies through reorganizations and turnarounds. Lisa Donahue of AlixPartners is profiled in the October 2011 issue of Treasury & Risk.
 

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Mesterharm’s Journey from Tax Accountant to Turnaround Consultant of the Year

09.21.11

Jim Mesterharm grew up in Crown Point, Indiana, a place he describes as surrounded by corn and very much like the place that a fellow Hoosier, John Mellenkamp, sings about in “Small Town."

There’s very little about Mesterharm that’s “small town” today, however.  Managing Director in the Turnaround & Restructuring Services Practice at AlixPartners, Mesterharm has played a major role in rescuing some of the nation’s largest companies, including, most recently, General Growth Properties.  For his work as restructuring advisor to GGP, Mesterharm was named Global Turnaround Consultant of the Year by the Global M&A Network.

Rescuing Major Corporations

Mesterharm says his award was, in part, recognition for the groundbreaking nature of the General Growth case itself, and that his entire AlixPartners team, as well as the many other firms involved, including Kirkland & Ellis, Weil Gotshal, Miller Buckfire, UBS, and the senior management team of GGP led by Adam Metz and Tom Nolan, are to be credited for the turnaround.  “GGP was a case of firsts,” says Mesterharm.  “It was the largest real estate bankruptcy in U.S. history, and one of the top ten of all time by measure of debt.  It was also one of the first to restructure collateralized mortgage-backed debt securities on a mass scale. We were able to run a competitive auction process to secure the capital needed to emerge the company from bankruptcy and retained the ability to tap into the public markets.” 
 
From the time GGP filed for bankruptcy protection to its emergence, the total enterprise value increased by over $10 billion.  Once worth a few cents a share, the stock of GGP, as a combined entity, is now trading for around $22 a share on a share equivalent basis.

According to Mesterharm, GGP qualifies as only one of his most interesting and challenging cases.  Another is Parmalat USA, where he served as Chief Restructuring Officer in 2003 and 2004. Parmalat USA’s parent in Italy, one of the largest dairy companies in the world at the time, was nearly brought down after members of the family-controlled business were found to have embezzled hundreds of millions of dollars that they used for personal pursuits outside of business. When the fraud broke, the principals fled to Canada or Italy, where they were from. 
 
The Italian administrator, Enrico Bondi, hired AlixPartners to run Parmalat’s North American business, based in New Jersey, and keep it operational long enough to sell it.  That charge was easier said than done.  When Mesterharm arrived on a Wednesday, he found an $800 million to $900 million business without a management team in place (as they’d fled) or enough money to last until that Friday.  In short order, he had to stabilize the situation, determine how much liquidity was on hand, and keep a food processing business running. A shutdown of even 24 hours would have resulted in bacteria starting to grow that would destroy the food quality requirement of equipment, reducing it to scrap metal.  “We dropped in with a small team and basically had to take over management of the company, ration cash, and determine what operations could be saved.”
 
With buyers smelling blood in the water, Mesterharm and his team bought enough time to avoid a fire sale, first convincing Bondi to wire enough money to keep the company afloat.  They put together a plan to fix the business and convinced General Electric Capital to fund a DIP loan to enable Parmalat to reorganize, as opposed to liquidating or selling.  Along the way, Mesterharm faced one challenge after another.  “We had to shut down plants that were operated by the Teamsters, we had to deal with competitors that were engaging in questionable practices to try to drive the company out of business, and we had to use the bankruptcy process and some strategic thinking to reorganize the company in under 18 months.”
 
“At the end of the day,” says Mesterharm, “secured creditors that were staring at pennies on the dollar ended up receiving at least 100 cents on the dollar, and unsecured  creditors ended up getting 70 to 80 cents on the dollar. We took a company that was days from shutting down to one that got a second chance.”
 
The Parmalat restructuring is a case study at Northwestern University’s Kellogg School and was published by the Harvard Business Review as a story of a successful Chapter 11 turnaround. 

The Journey to AlixPartners

The GGP and Parmalat assignments were exactly the type of work Mesterharm had been seeking since his college days. Upon graduating from Purdue University, he went to work for Ernst & Young as an entry-level tax accountant.  He assumed that audit and tax work would offer the most excitement in the accounting field, but soon concluded it fell short in the forward-thinking, action-oriented line of work he was looking for.  A rotational intern program at E&Y landed him in the firm’s restructuring group and, once there, he was “instantly hooked” says Mesterharm.  He worked for several years in E&Y’s restructuring business, but grew restless there also. “Although I was more in the transaction side of the business where the action was happening, we were still primarily financial advisors, focusing on plans that the companies had put together.  I still felt I was on the outside looking in as others executed and developed the plans, so I went looking for a place where I could do that.”
 
That place was AlixPartners. “I found a small firm located in Southfield, Michigan called Jay Alix & Associates.  At that time, restructuring was a realm that was often left to ‘single-shingle’ people who were turnaround guys.  I looked at what Jay had created and it really was a revolution in the consulting world where the focus was filling interim management roles as part of a firm. At [Alix], people were working in teams to lead turnarounds. In 1996, I made the jump.”
 
Mesterharm has been at AlixPartners since. During his tenure at the firm, he has been at the center of many high-profile restructurings in a variety of industries. In addition to the Parmalat dairy business and the GGP real estate conglomerate, Mesterharm has played major roles in rescuing such companies as Silicon Graphics (supercomputers), Zenith Electronics (electronics), Safety-Kleen (hazardous waste), and a number of plastics companies. “We’re experts in the situation and we’re quick learners so that we become experts in the industry,” says Mesterharm.  “Most importantly, we bring a strong team to the job — some with industry operations or cash-management skills, others with skills ranging from IT systems to procurement of raw materials and components.”

Addicted to Action

Mesterharm’s career arc, which has taken him from the cornfields of Crown Point to the Chicago offices of AlixPartners, is reflected in his personal life as well.  Married for fourteen years to his wife Jennifer, and with a son and daughter, Mesterharm’s vacations reflect his attraction to the hard-charging, fast-paced world of corporate restructurings.  He likes to ski and golf, discovering both sports relatively late in life.  “I’m kind of addicted to it.  It’s hard for me to relax, so I dread a vacation that involves lying on the beach. When I sit there, I think about all the things I should be getting done.  When I’m going down a ski slope, I have to focus on what’s in front of me. In golf, I’m focusing on the strategy, the next step.  These activities are very much in line with who I am.”  ¤

 

Mesterharm’s Three Keys to Success…

1. Be a decisive leader.  Making no decisions in a turnaround situation or getting bogged down in “analysis paralysis” can be damaging to a company when time and liquidity are its most precious assets.  Going hand-in-hand with that is not being too proud to course-correct. When decisions are being made with less than perfect information, you can’t be too stuck on a decision.  While the quickest route from point A to point B is a straight line, in a restructuring it is often a zigzag line, with new decisions constantly changing the direction.  As long as that line is continuously moving forward, you’re doing the right thing. 

2. Keep a level head and remain calm.  Distressed companies are in extreme turmoil.  People are concerned about their investments, their jobs, their future.  Providing a calm, professional approach to the situation lowers the angst and anxieties, which are already on edge and likely preventing progress from being made. 

3. Manage expectations and communicate.  Keeping people informed of the problem, the approaches to solutions, and the status of efforts goes a long way toward creating a team environment where everybody is on the same page and pulling together for the common good.  There needs to be an understanding of the size of the hole that has to be dug out of, how it can be done, and what everyone can do to help.  That extra level of communication brings the many different parties together for the success of the entire enterprise.
 

Reprinted with permission of the Beard Group © 2011. 

T&W Trends is published monthly by the Beard Group, P.O. Box 4250, Frederick, MD 21705 
www.beardgroup.com.

Griffin Breaks Silence on Time Inc., What Lies Ahead

09.05.11

The former Meredith and Parade exec has also formed "a substantial relationship" with global management consultant AlixPartners, which has done turnaround work for Chrysler and worked with the Tribune Co. and Reader's Digest. Alix wants to build "a substantial media practice" with Mr. Griffin's collaboration, he said. The website for his new firm went up last week.

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The calm after the storm

08.26.11

After rates rose and plunged dramatically in 2010, shippers will see more stability this year. Increases in capacity will outpace volume, keeping rates from rising

REPLAY: Fine-tuning Your Due Diligence Playbook

08.19.11

With failed mergers ranging in number from 30% to at least 80% according to various studies, it's no wonder deal teams at acquisitive and target companies are demanding greater due diligence. The process has become part science and part art, but the goal has remained the same: minimize risk and create value for buyers and sellers. Join The Deal senior editor Mary Kathleen Flynn for our webcast “ Fine-tuning Your Due Diligence Playbook” as our host examines how companies' due diligence processes are evolving and how these techniques are impacting the flow of M&A. We'll also examine some recent failed and successful mergers that were impacted by the due diligence process. After listening to just 60 minutes of our in-depth discussion with our editor and leading experts, you'll have a refreshed perspective on the key factors that will make the difference to your due diligence execution success and effectiveness in this uncertain economy.

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Fine-tuning Your Due Dilligence Playbook

08.09.11

(Webcast) Register to hear Steve Deedy, managing director and co-leader of the enterprise improvement practice at AlixPartners; and other experts The Deal's "Fine Tuning Your Due Dilligence Playbook." The webinar will take place on Thursday, August 18th 2pm EST/11am PST. The panel will be moderated by Mary Kathleen Flynn, senior editor/video producer at The Deal LLC.

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Private Equity and the Gathering Anti-Corruption Storm

08.09.11

By Harvey Kelly and Rob Morris, AlixPartners
The Deal, LLC 8/5/2011

EXECUTIVE SUMMARY
•Last year, the U.S. Securities and Exchange Commission brought more Foreign Corrupt Practices Act cases than ever before.
•The crackdown on FCPA violations and corruption is part of a larger enforcement trend.
•Private equity firms must be proactive in how they address compliance; identifying risk is only a small part of risk mitigation.


 

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Auto Sales Stall as Unemployment Puts Peak Out of Reach: Cars

08.02.11

(Bloomberg) Perspective by Mark Wakefield U.S. auto sales have stalled, casting doubt on a rebound this year as persistent unemployment and tighter lending deter buyers.
 

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AlixPartners acquires Mercatus

08.02.11

(The Boston Globe) AlixPartners, a global business-advisory firm, said it has acquired Mercatus LLC, a Boston-based strategic consulting firm focused on the retail financial services industry.
 

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One-man Civilisation: Grayson Perry Exhibit at the British Museum

07.29.11

Peter Aspden talks to the artist (Grayson Perry) about how the British Museum is granting access to its collections to put together an exhibition of his choosing.

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"Brave New World”: AlixPartners Predicts Auto Market Headwinds, “Competitive Convergence,” And Other Challenges

07.29.11

AlixPartners, the consulting firm that led GM’s reorganization efforts, has put the perennial optimism of auto industry analysts on notice, introducing its 2011 Automotive Outlook by arguing...

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Koch Says U.S. Debt Solutions Not Likely in Short Term

07.29.11

July 28 (Bloomberg) -- Albert Koch, vice chairman of corporate turnaround firm AlixPartners LLP, talks about the current political stalemate over the U.S. debt limit and budget deficit, and the likely effects of a downgrade of the government's credit rating. Koch speaks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." Video provided by The Washington Post

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5 Questions to Determine if Your Independent Hospital Should Sell, Partner

07.15.11

Small and medium independent hospitals are facing increasing pressure as healthcare organizations form mergers, affiliations and other combined arrangements. Should these independent hospitals join the masses and sell to a larger system or hospital? Two experts in hospital management share questions independent hospital leaders should ask to determine if a sale or affiliation would benefit the organization and if so, how to begin the negotiating process.

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A Compelling Case for a Wider Funding Base

06.29.11

A recent call for dialogue on private-sector co-operation is timely as Dubai is well-placed to attract a new pool of capital for key infrastructure projects to boost its economy.

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The Price Is (More) Right

06.01.11

After several years of cutting costs to the bone, many companies are reacting to today's soaring energy and commodity prices with trepidation: they would like to raise prices to maintain margins, but aren't sure when — or if — they can successfully pass along increased costs to customers. 

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State Budget Crises, National Health Reform

05.16.11

Tough Love for Public Hospitals or Rough Road to Restructuring?

Public hospitals likely face a period of financial and organizational restructuring due to states cutting Medicaid funding to reconcile budget shortfalls and national funding health care reforms cutting services in the near future, according to an article in the May 2011 edition of the ABI Journal. In “State Budget Crises, National Health Reform: Tough Love for Public Hospitals, or Rough Road to Restructuring?,” author Eva Anderson of AlixPartners (New York) provides an overview of the present and future challenges of public hospitals. Anderson’s article warns that boards and management of public hospitals and other safety-net institutions are likely to see an accelerated financial crunch as governors and legislators tackle their states' fiscal year 2012 budgets, and as federal health reform eases toward implementation on Jan. 1, 2014.

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To Sell or Not To Sell

03.22.11

Why Common Assumptions about Manufacturing Assets May Be Costing You Money

Many turnaround experts believe that the key to fixing a distressed manufacturing company requires quickly turning assets, including idle factories or other underutilized facilities, into cash while simultaneously reducing expenses. However, selling a factory may not always be the best way to obtain value or minimize the costs associated with that asset.

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Will New Regulations Deter Corporate Fraud?

03.08.11

2011 Forecast

In a never-ending battle against fraud, white collar crime and corporate corruption, combatants will be wielding a way an array of controversial new weapons beginning in 2011.

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Making Sense of the Current Restructuring Marketplace

02.18.11

Alan Holtz and Spencer Ware

With unemployment hovering around 10%, the stock market at 2005 levels, the trade deficit trending upwards and the massive bankruptcies of 2009, one could reasonably expect corporate restructuring activity to be at very high levels in 2010. Yet most restructuring professionals would tell you that this seemingly intuitive conclusion is simply not accurate. Actually, many of these professionals are finding that 2010 has evidenced a dramatic slowdown in restructuring activity. Why is it that in the midst of potentially the most difficult economic era since the Great Depression there is not more work for bankruptcy attorneys, turnaround consultants and restructuring bankers? Let us try to explain.

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The Mittel Ground

01.14.11

Brendan Scott

Germany’s manufacturing ability and fabled Mittelstand balance fears of struggling exports and a double-dip recession to leave a mixed Weltanschauung for private equity.

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Restructuring BearingPoint, an Inside Look

11.15.10

This case study written by David C. Johnston, explores the restructuring of BearingPoint, one of the world's largest IT consulting firms.

In an industry where many troubled human capital firms have imploded in the face of challenges, leading to value-evaporation and massive job losses, the BearingPoint restructuring had a significantly contrasting and positive outcome.

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CNBC "Closing Bell" Interview with Fred Crawford, CEO of AlixPartners

09.29.10

A look at what's behind the growing pessimism in the economy.

Maria Bartiromo interviews Fred Crawford on recent AlixPartners survey.

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Navigating GM's Four-Point Turn

09.24.10

AlixPartners' Albert Koch, who helped oversee the automaker's revival, identifies the takeaways from the turnaround

When General Motors' Camaro was unveiled in the 1960's, the car's first commercials depicted a white automobile, complete with rally racing stripes, ascending from a volcano. Set amid smoke, rocks and small explosions, with a music track seemingly borrowed from the TV show "The Land of the Giants," the SS350 was Chevy's answer to the Ford Mustang. More than 40 years later, the commercial albeit not the message - is still fitting, as GM finally climbs from the ashes of a monumental turnaround that had been put off for decades.

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AlixPartners' Etlin on Distressed Spanish Media Companies

03.17.10

Maria Woehr

AlixPartners' Holly Felder Etlin says that a pickup in advertising will likely save some distressed Spanish-language media companies in the U.S. The surviving media companies in the sector are likely to face consolidation down the road. Some of those companies that could target include Spanish Broadcasting System Inc. and Mega TV, as Richard Morgan reports for The Deal Magazine.

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Upcoming Waves of Media Restructuring

03.16.10

Maria Woehr

Turnaround expert Holly Felder Etlin says the media industry will go through multiple rounds of restructuring, akin to what the auto industry has endured, before consolidation picks up. As managing director of AlixPartners LLP, Etlin recently helped Freedom Communications Inc. through its bankruptcy reorganization. In this video conversation with The Deal, Etlin gives her thoughts on how media companies need to restructure and who is acquiring distressed properties.

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AlixPartners Ranks No. 1 Among Business Advisory Services Firms In Consulting Magazine Survey

08.27.09

Survey Also Shows AlixPartners Highest in ‘Morale’ and ‘Greatest Sense of Helping Clients’ Categories

In a business environment that has seen more and more of the world’s leading companies turning to advisors to help them stay healthy or to help rescue them from distress, a recent survey by Consulting Magazine rates AlixPartners as the number-one business advisory services (BAS) firm, and sixth among consulting firms of all types. The firm also ranked highest in the “morale” and “greatest sense of helping clients” categories in the magazine’s 2009 “Best Firms to Work For” survey, which gathered information from 236 major firms in BAS, human resources, information technology, operations management and strategy consulting.

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How to Spot - and Help - an At-Risk Supplier

07.31.09

By: Foster Finley, AlixPartners

Current economic realities make one thing clear: today's business continuity needs cannot be met by using yesterday's risk-management approaches. That's especially true when it comes to your suppliers, who should they falter have the potential for derailing your operations. Supply chain managers need new mechanisms to spot "at-risk" suppliers - and proven processes for intervening to reduce the impact of those suppliers' problems.

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"Is IT A Ticking Time Bomb In Your Next Deal?"

05.24.09

By Bruce Myers & Chris Payne, AlixPartners | Buyouts

When it comes to mergers and acquisitions, and the related due diligence, carve-out execution, and integration planning, one question that senior executives and board members never seem to ask often enough is, "Have we thought through the Information Technology [IT] issues?"

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“AlixPartners Introduces New Outsourcing Tool that Determines ‘Best-Cost Countries”

05.13.09

Mexico Surpasses China and India in the Analysis; China’s Total Costs Just 6% Below U.S.’s

AlixPartners LLP, the global business advisory firm, today unveiled a unique new tool designed to give company managers and owners a much more precise understanding of which locale in the world is not just a low-cost country (LCC) for various manufactured components in today’s fast-changing global economic environment, but the best-cost country, or “BCC.”

MITIGATING FCPA RISKS WHEN DOING BUSINESS IN CHINA

02.10.09

 

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Managing Along the Cutting Edge

02.09.09

(Newsweek) Think Smaller: Most CEOs have strategies for good times. This recession will require a new set of skills.

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For Retailers, A New Way to Rapidly Deploy Labor Force Reallocation Without Workforce Management Software and its Inherent Disadvantages

01.21.09

By: Joel Bines, Keith Jelinek and Russ Spieler - AlixPartners

While supply chain and distribution efficiency has been a goal of retailers for many years, more retailers than ever are now looking toward the “front of the store,” particularly a better allocation of labor, for efficiency gains.

AlixPartners Perspective: Crisis Management

06.08.08

In June 2008, when Fred Crawford was named CEO of AlixPartners, a 650-consultant business advisory firm based in Southfield, Mich., no one could’ve predicted what challenges were ahead. “I had worked at AlixPartners for five years and we were just starting to deal with the credit crisis,” he says. “But soon after I took over as CEO, we’ve sort of had the perfect storm.” Luckily for Crawford, AlixPartners made its name working with companies in severe distress, but that aspect of the business hadn’t been the firm’s bread and butter lately. It is now.

Consulting: So, do bad times for everyone else mean good times for AlixPartners?

Crawford: Well, the heritage of the firm is working with companies in bankruptcy and firms facing a pretty severe challenge, and certainly, we’ve got plenty of companies in that situation right now. That’s still the area where our brand is best known. Five years ago, I would’ve been more willing to say definitively, “yes, bad times for the economy equals good times for AlixPartners,” but because we’ve been so focused on growing our healthy company business we’ve actually run a pretty balanced model. Over the last few years, our restructuring business has only accounted for about 20 percent of our overall revenue.

Consulting: What’s your forecast for that business?

Crawford: I could easily see it becoming a third of our business … maybe more. Market conditions really play to those strengths of the firm. Overall, we’ve been growing at about 35 percent the last few years, and we think this will be a pretty good year, as well. This year and next should be robust.

Consulting: What type of work are clients asking for?

Crawford: The majority of the work right now is around cash preservation, liquidity and cost reduction work. The hot industries for us are automotive, financial services, retail consumer products and media, but it’s less industry focused because the internal problems of a distressed company are much more important than what industry it’s in.

Consulting: How big is the distressed space right now?

Crawford: I’d rather not talk actual figures, but we could have 50 percent more people than we have right now and still wouldn’t have enough capacity to handle today’s demand. Our senior model doesn’t allow us to add staff quickly.

Consulting: You have no junior-level people?

Crawford: That’s right. When a company is in a near-death experience, it needs leadership from senior people who represent a calm in the storm. Our entry-level profile is five years in industry, a master’s degree and five years in consulting.

Consulting: Are you still seeing some of the healthy company work you were before?

Crawford: We are. Some healthy companies are saying “we better get very efficient now because if this slowdown is as long as some say, we’re going to have to hunker down to get through it.” I wouldn’t have predicted that, but I’m glad to see it.

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New CIOs First 100 days should not be a honeymoon

04.25.08

 

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New CIOs First 100 days should not be a honeymoon

04.25.08

 

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New CIOs First 100 days should not be a honeymoon

03.31.08

 

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Getting The Most Out of IT-C-Suite Survey

03.08.08

Although most top executives will agree with the common platitudes that information technology (IT) can enable their business processes' and 'help create a competitive advantage', they are often unsure of exactly what actions to take to drive their IT organisation to achieve its full potential. There have been literally hundreds of IT surveys over the past decade, but when it comes to giving insight to top executives it is extremely difficult to find the 'golden nuggets'.

Over the first four months of 2008, through a series of interviews and surveys of top executives from nearly 60 European and North American companies, AlixPartners gleaned a number of practical guidelines for executives, the following five items emerged.

1. Don't hire an IT director from the 'business' side of the organisation. Find an innovative IT executive who is business-minded.
Hiring the IT director is the most direct way to influence the IT function, and while it is certainly true that the Chief Information Officer (CIO) should be 'business-savvy', picking one whose expertise is in a functional area other than IT almost always causes problems. The common belief that in order for the IT department to be 'business orientated' their leader must come from the business, was found to be a fallacy according to this survey. The problem with a non-IT background is that the individual doesn't understand IT and cannot provide the required leadership to the IT organisation. In every instance where the IT director came from another business function (finance, supply chain or sales), they did not last beyond one or two years.

The follow-up interviews confirmed that individuals weren't a success within the IT role because they had difficulty gaining the respect of the IT department and didn't understand technology enough to guide the company in its use.

The IT director must be a strong IT person who is capable of understanding the business and can work between the IT area and the business. This is a unique individual, but with society becoming more and more IT literate, these individuals are more readily available than ever before.

The survey found that all of the IT directors in the companies surveyed who were rated as above average came up through the IT function. It also found out that over 90 percent of IT directors who have been in their current role for more than four years were considered to be highly innovative in terms of applying to IT to improve the company's core business.

2. Don't worry about your transaction systems. Put all your money into business information support systems.
In the survey, over 95 percent of IT departments were rated much lower on 'providing actionable business information' than on 'providing sound transaction systems'. Time and again in follow up interviews, finance directors and CEO's expressed their frustration at not receiving timely, useful information on which to base business decisions. Processing sales orders, shipments, cash receipts, purchase orders and other transactions were not cited as key concerns amongst executives, but things such as the following were:

  • ability to determine customer and product profitability across business units;
  • global product costing ability to enable effective make versus buy and material sourcing decisions;
  • timely information and analysis to enable predictive and preventative plant maintenance, and
  • timely information and analysis to enable improved raw-material, finished-goods, and production-capacity planning and management

These types of requests by senior executives have been made for decades, of course; yet, according to the interviews, the majority of IT projects today are still focused on implementing the next big enterprise resource planning (ERP) system, rather than on standardising date definitions and implementing business-decision support systems. Executives can have a direct impact on this area by insisting that their IT investment is clearly focused on providing the exact type of information that they need to make these key, ongoing business decisions. Consulting: What type of work are clients asking for?

3. When it comes to approving large projects - don't.
More than 80 percent of the top executives surveyed in the study included 'very large system projects gone wrong' as one of their top three IT-related problems. In probing more deeply into the causes of the project problems, two items came up consistently:

  • As the size and complexity of a project grown, the ability to find systems integrators and internal personnel with the expertise to handle such large projects is reduced, resulting in the project failures.
  • The top executives in both IT and the business unit changed due to the length of the projects, so there was nobody who was really accountable from the beginning to the end. This makes it easy to lose focus and let things slip, and/or to blame the prior regime.

The implication for executives of this finding is to insist on only 'bite-sized initiatives'. You can have an overall plan developed for the large project, but make sure that the implementation is divided into discrete pieces so some portions of functionality are delivered within six to nine month timeframes with less than 2,000 working days of effort.

4. Change your project manager before you kick off your next large IT project.
Even in IT departments viewed as successful by top management, according to the survey between 25 percent and 65 percent of major IT implementations are delivered over budget or late. The reasons cited include the classic ones, such as poor scope control, lack of senior level business involvement, and poor project planning.

Moreover, in follow-on discussions with the survey participants, it became clear that the root cause of project failure is almost invariably a poor-performing project manager. Almost all of over-budget and late projects cited by respondents had a project manager who wasn’t judged to be up to the task, and who in the end had to be replaced or reinforced with help.

The bottom line should be that since there is a high probability that an IT project manager may be changed at some stage during a big-project implementation, why not ensure at the outset that you have an expert in place who is capable of doing the job.

5. Speed is most important when it comes to IT enabling new business companies.
According to the survey, the principal complaint top management has regarding their IT department is that they do not get projects done fast enough. Although IT cost reduction was on the radar screen in the survey as one of the top three cost-reduction areas of focus for just under 30 percent of those surveyed, a much higher percentage of executives were looking for IT to enable key business initiatives. More than 85 percent listed working-capital management as one of their top three balance-sheet improvement initiatives, and over 85 percent listed improving product profitability as one of their top three profit improvements.

In follow-up interviews, executives consistently said that because their business environment was changing so rapidly (eg. more acquisitions, spin-offs, new product roll-outs) they were in greater need than ever for their IT departments to be able to react quickly and deliver new capabilities within weeks, not months.

To cope with this, companies must put in place an IT governance structure and delivery capability that is responsive and flexible enough to recognise, prioritise, and quickly implement systems changes to enable delivery of the required business results. Successful companies are able to blend internal and external IT resources, use 'agile' IT implementation approaches, and get the business executives to take ownership of the prioritisation of IT projects from both a budgeting and execution standpoint.

By keeping the five points highlighted in the forefront when dealing with their IT departments, executives can help ensure that their companies waste less IT money and drive greater business leverage from the IT function.

Bruce Myers, Managing Director, Chicago
Bruce has over 30 years of consulting experience and is currently a leader in the IT transformation services practice of AlixPartners. AlixPartners is a global consulting, restructuring and financial-advisory services firm, and is on the web at www.alixpartners.com. Bruce specialises in helping corporations fix or transform their IT organisations, plan and execute IT-enabled business improvement, and plan and execute merger integration/spin-off programs.

Andrew Duncan, Managing Director, London
Andrew is a widely recognised professional with more than 20 years of international management consulting and operations experience. He has consulted with both large and medium-sized clients on a range of issues including corporate management and governance, corporate strategy & development, operational and supply chain strategy, strategic sourcing & procurement, global transportation distribution and logistics, post-merger integration, IT strategy, IT business alignment and governance, IT transformation and technology-based operational transformation, IT cost and service improvement, business process and IT outsourcing.

Robert A. Hecht, Managing Director, London
Bob Hecht has nearly 30 years of experience addressing strategic, managerial and operational issues involving information technology. Bob is currently based in London and leading AlixPartners' European IT Transformation Services practice. His expertise is in building and IT strategy around a company's business objectives, and enabling the organisation to extract the highest business value from their IT investment.

This article appeared in Finance Director newsletter published by CCH Information, a part of Wolters Kluwer (UK) Ltd.

'Finance Director newsletter is issued monthly to subscribers of various CCH products. It aims to provide topical articles to the financial management of middle-sized companies and, to a lesser extent, not-for-profit organisations and professional firms. For further information go to www.cch.co.uk.