BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--Turnaround Management Association - Journal of Corporate Renewal
Keith A Maib is a senior managing director with Mackinac Partners and co-leads the firm’s Financial Restructuring, Transaction Advisory, and Private Equity practice areas. Last year, he served as chief restructuring officer for AgFeed Industries. The sale of the company’s U.S. and China operations marked the first-ever sale of Chinese operations of a U.S. debtor to a Chinese buyer. Maib and seven other turnaround professionals received TMA’s 2014 Large Company Transaction of the Year award for their work on the engagement. Maib has more than 25 years of diversified business experience, including serving as a partner in two international accounting firms. He has served as CEO, CFO, COO, and CRO on a number of engagements in industries that include insurance, telecommunications, hospitality, retail, real estate, technology, and manufacturing. He holds a bachelor’s degree in business administration with an emphasis in accounting from the University of Kansas. Maib sits on the Archdiocesan Council of the Orthodox Church of America and was invested into the Order of St. Andrew the Apostle in October.
Q: How did you gravitate into turnaround and restructuring work?
MAIB: I started my career out of college with Price Waterhouse in Kansas City and was fairly active in relationship building and community service activities. I became friends with a number of lawyers in town, who began asking, “Can you guys do this and that?”
That led to an opportunity to become involved in American Continental/ Lincoln Savings & Loan, which at the time was the largest filed Chapter 11 in history. From there, with the Price Waterhouse restructuring practice, I just developed and grew as there were more and more opportunities to get involved.
When I started in the business, which was in the 1987-'88 time frame, the accounting firms weren’t really in the business in a big way. E&Y had a fairly nice practice, but they were really the only ones. Price Waterhouse had a large litigation consulting practice that was largely focused on the West Coast. They hired a gentleman by the name of Don Thomas, who was a successful, very well-known bank workout officer. Don came in, I believe, as the first direct admission partner that Price Waterhouse had ever had and with the charge to build a troubled company Chapter 11 consulting practice. It was a very successful practice that ultimately was sold and is now known as FTI.
I was fortunate to be in on the ground floor, and my entrée to that practice was the introduction to American Continental/Lincoln Savings & Loan. As soon as Don heard I was being asked to get involved, he got involved very quickly and the practice kind of took off from there.
Q: They probably didn’t even call them turnarounds at that time.
MAIB: No, and it was primarily creditor focused in the early days. Then, Bettina Whyte (now a managing director with Alvarez & Marsal in New York) came into the practice, and Bettina and I became close colleagues. Along with some other folks, we started doing primarily company-side focused activities, moving part of the practice away from just being creditor and bank group focused to working on behalf of companies. I had a couple of those opportunities at Price Waterhouse, including a company called Borland, which at the time was the third-largest desktop software company in the world. I had just made partner at Price Waterhouse and was asked to come out as an advisor to Borland’s board. It was experiencing liquidity and other operational issues. Shortly after that, Borland’s board offered me the opportunity to become chief operating officer. I really liked running companies. I really liked the challenge of actually making the decisions, being responsible for the decisions, and implementing the decisions. I resigned from Price Waterhouse to take that opportunity and had good success at Borland. Then I started a career of running distressed companies.
Q: Who inspired you along the way, both professionally and personally?
MAIB: Two mentors early on in the business, not surprisingly, were Don Thomas and Bettina Whyte. They were very good practitioners at a time when there weren’t a whole lot of folks who really did what we did, and they gave me a lot of opportunities to try things, to experience things, and to learn it on my own, but they were always there to mentor and help with particularly difficult situations.
I really liked running companies. I really liked the challenge of actually making the decisions, being responsible for the decisions, and implementing the decisions. I’d have to put Steve Knowlton in that book as well. Steve ran the restructuring practice for Price Waterhouse. He wasn’t really a practitioner, but he was a very good practice leader and a tremendous mentor.
Then, there is Henry Miller. Henry and I have been working together for almost 25 years now. Henry’s been a great friend, a great mentor, and a professional colleague. Of all the people I’ve worked with, he’s the one I probably have the most respect for.
Q: What were some of the most valuable lessons you learned along the way?
MAIB: I think it’s the thing that all turnaround folks learn—liquidity is the key to everything. Without liquidity, you don’t have much of an opportunity to meet the challenges that you have. Number two, most companies don’t wake up one morning and find themselves in a world of distress. They migrate there. In that process of migration, you marginalize your supply chain, you marginalize your people, you marginalize your capital, you marginalize your products, and you marginalize your capital investment. It’s not just the financial distress that’s at the root of the problem, it’s all the other sorts of things that go with that. True turnarounds have to address all of those issues.
They have to address questions such as: What’s the current state of the competitiveness of the product? What’s our true ability to execute and deliver products and services that are competitive and meet the demands of the marketplace? What’s our true level of talent? Do we have the people that we need in the critical and key positions? You really have to address all of those issues ultimately as part of the turnaround plan.
That’s why in most instances I believe a big part of our job is to uncover where the value of the business is and develop a plan that is believable and can be due diligenced by a potential capital provider. Almost always, these transactions result in changes in control of the business, but with expectations around the management of products and capabilities going forward and with blueprints so that people can then take that, implement it, and actually recover businesses to a healthy state. It takes a very long time to do that.
Q: Are companies that end up in Chapter 22 or Chapter 33 those that only address one or two of those issues?
MAIB: Yes. They really only address the capital structure side of it. You always have the friction and dysfunctionality within the capital structure. Debt holders usually don’t want equity; they want interest bearing securities. That results in a natural bias that often results in the restructured company being overleveraged. When you add up all the things I just went through—about management, products, capital investment, and all that—when you add that a company is still overleveraged, that’s where you get subsequent failures of a lot of these businesses.
Q: What have been some of your most gratifying, favorite, or important engagements along the way?
MAIB: PlayPower is probably my most satisfying company because I served in a lot of different roles. I served as chief restructuring officer. I served as chief financial officer. I subsequently served as the chief executive officer and now I sit on the board.
PlayPower was a good blueprint for how successful turnarounds really happen. You deal with the liquidity and cost issues first. You develop a restructuring partner who clearly understands the business. In this case, it was Apollo that was willing to inject new capital into the business and leave it with a level of leverage that was reasonable. We focused on getting the strategy right on the front end and then recruiting and hiring a management team that has just been outstanding. We’re in a position now where we have an opportunity to harvest the value of all of the good work we’ve done. It’s been five years in the making, so it’s been a long time, and that’s often what it takes to do these kinds of deals.
They’re the world’s largest manufacturer of commercial playgrounds. It’s kind of a cool business. I’ve done lots of different things, from raising pigs to software development to insurance and financial services. Getting up in the morning and working with people who design and build playgrounds for kids is a really cool business.
Borland was the first company I ran, so Borland will always be near and dear to me. It was a global provider of software. The time frame was 1993, 1994, and the whole technology revolution was in full swing. I’ve never been in a business where every day you went to work and you really bet the ranch with the decisions you made almost every day—platforms you were on, investments you were going to make, bets you were going to take on.
Borland sold dBase and Quatrro Pro and C+++ programing languages. Paradox. It was a very, very successful company with a number of really, really good products. I remember sitting in a conference room with the senior software engineers of the company in 1993 debating whether we should have a website and whether or not we ever thought e-commerce was something that we needed to think about as part of our own strategy going forward. This was 1993—it’s not really that long ago. It was a great time to be in that business.
Q: Looking back, that’s a no brainer. But at the time, nobody knew.
MAIB: Yes. Whether or not we should bet on Microsoft was another issue then. At the time, you had the raging debate as to who was going to control the underlying infrastructure of software, whether it was going to be the desktop, which was Microsoft, or whether it was going to be the network, which was Novell. And you still had IBM out there as a potential player.
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Mackinac Partners is a leading national financial advisory and turnaround management firm that steadfastly helps clients address and resolve financial and operational crises.
Through deep-rooted experience in managing financial distress, developing and implementing operational plans, facilitating capital restructurings and spearheading the purchase or sale of assets to help maximize enterprise value, Mackinac Partners is focused on uncovering emerging challenges, threats and opportunities that exist in its client’s competitive landscapes.
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Turnaround Management Association (TMA) is the leading organization dedicated to turnaround management, corporate restructuring, and distressed investing. Established in 1988, TMA has more than 9,300 members in 49 chapters worldwide, including 31 in North America. Members include turnaround practitioners, attorneys, accountants, advisors, liquidators, executive recruiters, and consultants, as well as academic, government, and judicial employees.
For more information visit: http://www.turnaround.org