I was away when they announced the last Q results. Go IMCO. Looks like the biz is picking up.
Here is an article about Questor Partners that mentions thier 25% stake in IMCO.
Turnaround Firm Finds Success In Failures
By Kopin Tan
NEW YORK (Dow Jones)--Jay Alix admits he drives bulldozers as a hobby.
"Some bankers play golf, I drive bulldozers," says Alix, who founded and runs one of the most prominent turnaround advisory firms. When friends in the construction business need to clear land, Alix shucks off his suit and pitches in. "It relaxes me and, hey, I get to change the outcome."
"Changing the outcome" is a big thing at Jay Alix & Associates, his burgeoning turnaround advisory business, and at the leveraged buyout firm he co-founded, Questor Partners. The phrase functions as a business slogan of sorts and is what his firm has done at Ryder System Inc. (R), Oxford Health Plans Inc. (OXHP), Unisys Corp. (UIS) and other companies Alix has helped restructure in recent years.
Despite the long bull market and continuing economic expansion, Alix's business is booming - Jay Alix & Associates is widely recognized as a pre-eminent restructuring specialist, and there seems to be no shortage of troubled companies and customers. The firm will take on more than 75 new clients this year and is currently working on restructuring efforts at Jitney-Jungle Stores (X.JIT), American General Corp.'s (AGC) A.G. Financial Service Center unit, Sabratek Corp. (SBTKE) and Harnischfeger Industries Inc. (HPH).
The list of restructuring candidates should continue to grow. The pace of restructurings hasn't slowed in good times, as companies have been getting leaner and meaner to compete globally. When a slowdown comes and default rates rise, turnaround firms stand to get a lot busier.
Alix expects more and bigger restructuring assignments over the next year, and the firm is continuing to expand. It has offices in Chicago, Detroit and New York, and this year opened a satellite office in London and launched a joint venture in Paris to capitalize on the restructuring wave sweeping Europe.
LBO Business Now Investing $860 Million Fund II
Alix's buyout business is booming too. Questor Partners' LBO fund has invested all of the $300 million it raised in 1994, and recently followed up with another $860 million raised from blue-chip investors including California Public Employees' Retirement System (X.CPE) and the pensions of Boeing Co. (BA) and Time Warner Inc. (TWX).
Alix started Questor in 1994 with Daniel Lufkin, one of the co-founders of Donaldson Lufkin & Jenrette, to invest in underperforming and overleveraged companies that need capital to turn things around.
Traditional LBO firms target mature companies with stable cash flow, but Questor bets on companies that need more work, the ones where it can produce the greatest increase in value in the shortest time. "It's like if we are walking down the street and we see nice house, nice house, run-down house and nice house, the run-down house is the one we want since it's the one we can fix up the most," Alix says.
Questor's first fund invested in 11 companies, and has sold its interests in five of them for tidy profits, including the sale this month of AP Automotive Systems to French auto-supplier Faurecia (F.FAU) for $340 million. One of its largest paydays came when the firm sold its truck rental company Ryder TRS Inc. to Budget Group Inc. (BD) for $265 million plus the assumption of $441 million in debt. Questor bought Ryder in 1996 for $123 million in equity and $452 million in debt.
Questor - named after a successful 1980 Lufkin deal - looks at 350 potential deals a year, but ends up investing in only about three to five annually. Its investments have ranged from bicycle makers to laboratories processing dermatology tissue samples. It also holds a 25% stake in Impco Technologies Inc. (IMCO), which makes alternative-fuel management systems for internal combustion engines.
From Consultation To Operational Changes
By all accounts, the turnaround advisory business is a tough one - running a growing company is dramatically different from managing or trying to stabilize an underperformer. Compared to other advisory work, the restructuring business is grittier and is often done under great pressure. "You really have to roll up your sleeves and get down and dirty," Alix says.
That hands-on approach puts the firm into everything from providing analysis and investigation to actual operational management to help stabilize a company. As such, the firm is hired as often by company management as it is by creditors and lawyers seeking to steer a company to recovery.
When National Car Rental (X.NLC) had suffered operating losses for seven years, Jay Alix & Associates was brought in as adviser. Instead of focusing just on cutting costs, the firm looked to increase revenue by turning more inquiries into confirmed reservations, capturing market share in the one-way rental business, and boosting point-of-sale products and services.
However, not all restructurings result in operational turnarounds. Sometimes, the goal is to stabilize the company, as when the firm helps to procure financing or rearrange debt.
Many of the firm's assignments today come from companies with more than $100 million in revenues in sectors like health care, retailing, the sub-standard credit market and automotive suppliers.
The firm's 19-year track record helps, as does being in a niche some other investment banks steer clear of because, as one banker puts it, "things often get too ugly."
Bankers and friends say Alix's outsized personality and his zeal for relentless networking helps too. Lufkin and other partners bring in clients, but it is Alix who tirelessly keeps the firm's name in the press and in the minds of industry players. He has written books and lectured on corporate change at business schools from Harvard to Michigan - anything to establish the firm in the closely knit circle of restructuring lawyers and bankruptcy judges. For years, he wrote training manuals and taught accounting and financial analysis courses for judges. "I told them everything I knew already, and now there's nothing left to teach," he says.
Still, Alix, who was a 24-year-old certified public accountant when he ventured into the restructuring business, holds genuine affection for his work. "Sometimes, it can be very gratifying when you can say, 'That company was in trouble but now is not because of what we've done," he says. "That's when we can say - hey, we've changed the outcome." |
