The Exchanges

Q six days. And so the liquidity problem went away and it was just one thing that I did, but it took me like two weeks to, to go through everything to figure out, ah, this is the thing that I can do. The easiest thing I can do with the biggest results. So how do you Discover, or how do you let that information surface, what that lever should be?

A Well, I mean, when, when you've been doing this for a long time, all right, what you learn is with all these companies, whether it's a, whether your back is up against the wall, or, you know, you have time to come up with a, with a, a much more, um, You know, comprehensive turnaround plan. Liquidity is number one. So that, because basically if you don't have sufficient liquidity to buy you the time to fix the company, you know, you can have the greatest team in the world. You can have a great plan, but you won't be able to make it happen. So that's a, that's really the first thing, uh, we, uh, I attack and, you know, and my role at, at Getzler-Henrich Which is a financial restructuring firm. And in my experience working with companies, the first thing you really want to do is do what we call a 13 week cash flow. All right. We want to look at, uh, at sources of funds and expenses and, and figure out whether, you know, what, what the pain points are to attack that. And then when you look at that and you see, you know, when you're going to be running out of cash, which often happens or you're stressed, then you, you say, okay, I've got to pull these levers to do it. Am I not gonna, am I gonna stretch my payables? Am I going to, uh, draw down on my credit line? Am I going to, um, look at, at reducing expenses, reducing headcount, all those different things. And there's lots of, aga…

AI assessment note: “the first thing you really want to do is do what we call a 13 week cash flow”

Q So if it seems like such a golden goose, why not start it from scratch yourself?

A Because, well, because the cost of doing it, the locations, the investment, you wouldn't get anybody to do it. Ok, because, you know, they, they were the original off-pricer, and you've got so many other people now, like, you know, TJ Maxx and Burlington and whatever, even though they don't go up as high, alright, uh, you know, they're, and believe me, when things were getting tough, uh, we, you know, we went to them and said, you know, would you consider buying it? And the business wasn't big enough. For it to be important enough for them to do it. And they said, you know, you know, unless it's a billion dollar business, we're really not interested. So, you know, and, and also timing is important too. It was a, it was a rough time for retail. And so people were not of a mind to, to, you know, to invest or do a, a transaction. So a lot of these things are, are, um, uh, uh, You know, are timing related as well.

AI assessment note: “because the cost of doing it, the locations, the investment”

Q Of the strip malls and shopping malls that still are open, what do you think is going to replace those big box stores that, that fell apart inside of those, those malls?

A Well, that's a very interesting question, and that's what a lot of, of, of mall operators are thinking about, all right? You're going to see a certain number of the, the A malls and the B plus malls and a lot of the B malls will be okay, right? Uh, but even with them, if they lose a big box, they have to decide how they're going to re-merchandise their, their, uh, their properties. And a lot of them, you know, and they're doing things like, you know, more, um, urgent care facilities. Uh, they may be, they're doing, they're bringing in a lot more food, a lot more restaurants. Restaurants are, are, you know, they, they, that, that seems to broaden the appeal of, of the malls. Customers really like it. Um, and then, you know, some of the malls that wouldn't bring in a Costco before are bringing in a Costco, or, you know, um, you know, not, not a, what we call full price retailer because they, or a Target, because they bring in traffic. And they're, and they're well-run. So they're rethinking, right, what's, what's gonna make that, that property attractive to their, to their customers. You know, for some of the lower, lower, and oh, and also, in some of the, the, the malls, they're also looking at the amount of property they have, right, and they're saying, okay, we can, we can build condos, You know, we can put in a hotel. We can do all sorts of things with the asset to, you know,…

AI assessment note: “they're doing things like, you know, more, um, urgent care facilities.”

Q So what's a company that you were tasked with restructuring your, your, um, modeling says it was possible and it failed anyways. And, and why do you think it failed?

A Oh, okay. Well, I can't, there was a very famous, uh, and I wasn't the CEO of this company, but I was on the board, and I was very actively involved, and, um, It was a very well known name in retailing. It had been around for a hundred years. They were one of the first, uh, uh, apparel discounters. And, um, they had been through bankruptcy twice before, but the, but the business itself was unique and customers loved it. And a couple of things happened. Once was when they went through the second bankruptcy, they were acquired by a private equity firm, which isn't necessarily a bad thing. Right? But, um, because they really understood the retail business, and I had been involved with them with other, with, you know, with other situations that were very successful, and what happened was, number one, they had too many stores. When they, when they went through the second bankruptcy, they didn't close enough of the underperforming stores. That's number one. Number two, and most important, was they brought in a new team A management team that was just the wrong team. And they basically drove the business into the ground. And when I got there, I had, I went to, to, you know, the owners and I said, you need to hire these people and bring in people who can make it work. Okay. They just, they, you know, and they, they, they just didn't get it. And so, so we didn't have the right team. And…

AI assessment note: “Number two, and most important, was they brought in a new team”

Q So normally when someone does consulting, they either get paid a flat fee or maybe some sort of percentage of upside. Um, I know that's what I look for. How does a company that helps other companies or structure generally get paid?

A Well, it varies. Okay. Some companies just do it on a, uh, an hourly rate. Right. Based on hours build. Right. Some do a combination of that and a success fee. So it, it, it's the, you know, the gamut. Some will also, some will also actually, if they believe in it, they'll say, okay, uh, we'll, We'll do this at X rate, but we want a certain amount of, of, of ups in the equity of the company. Or they'll do, or the, and the success fee thing could be, let's say, um, you're going in there to, to improve profitability. They may decide to say, uh, I've worked for a company where, where we got a percentage of the upside in savings. So that, so we'll, we lower the rate, all right? Of course, you know, customers always feel that the rates are too high, and you know, that's, that's a situation where, where the proof is in the pudding, right? You, you don't, you don't know whether it's worth it until, until you get the results, right? So sometimes, depending on the situation and the analysis of what we think the upside is, we'll say, okay, we're, you know, we're willing to, to bet on our being able to help you, and we want to share in the ups. Um, so it's, it's, it's sort of all over the place in that regard. But normally, normally restructuring firms, it's really that the core is, you know, uh, billable by the hour. That's where it starts.

AI assessment note: “Some companies just do it on a, uh, an hourly rate.”

Q What's a company that your modeling said could not be saved? And you said, screw it, let's do it anyways. And you succeeded.

A Oh, no, no, no, that doesn't work that way. If I believe, if I, if I do the analysis and I say that, you know, that there's, that, you know, there's, there's, it's funny in, in the business, it's kind of like the, the, the, the thing is, is that if this company went out of business tomorrow, would anybody care? And if the answer is no, then it's not a keeper. The other thing too is, for example, I was involved with the company Years ago, many years ago, uh, uh, and, um, my client was, you know, a distressed debt fund that was basically owned the, the, the, the company that did the photo studios in Walmart, ok?

AI assessment note: “Oh, no, no, no, that doesn't work that way.”