Michael Beattie has a reputation for helping troubled companies turn things around. He is the President and CEO of MBM Investments Corporation, a company which provides high quality construction and professional operational guidance to organizations around the metro Toronto area and nationally throughout Canada.
Over his long career, his expertise has been applied to buying and managing companies in trouble, mergers and acquisitions, working in leveraged buyouts, as well as developing financial sponsorship strategies for public and private equity companies.
Beattie has also worked with some of the largest construction companies across Canada and the United States. He recently shared some of his insights regarding what it takes to rebuild a company’s foundations and change it from red to black.
Q: In your experience, what are the most common issues with struggling companies?
A: There are a few. Across many industries, I would say controlling costs is one of the biggest—whether it’s labour or equipment or office supplies or anything. This includes labour negotiation and labour costs. Those have been critical problems for a few of the companies that we’ve helped turn around.
And focusing on generating cash flow is another. Capital expenditures and receivables can drain your cash quickly, even if you’re in a pretty healthy position. It’s even more important in a recession, because payments come in more slowly and creditors aren’t as lenient.
Another factor might be changing regulatory environments. It’s always of concern in some industries like health care or safety, but lately policies on energy, environment and finance have complicated things for most companies in one way or another.
Q: Do you have a series of first steps that you take when coming into a challenging scenario?
A: We assess what’s happening on the ground. Even if they’re following their current business plan, it could have been flawed from the beginning. And we focus on people. We get the team together and see where the communication is breaking down, because there’s almost always a problem there. Then we determine if the problems stem from branding and sales, or with operations on the back-end…maybe both.
Once that’s sorted out, we find ways to expand or find new sources of revenue—but only when we know the machine is capable.
Q: You are an expert in operational management—are there common skills lacking among the leadership of struggling companies that lead to similar problems?
A: Today’s business leaders can’t adequately deal with the risks facing their businesses because they don’t have problem-solving skills. This is a fast-changing business environment and corporate managers are jumping from one fire to another. Companies need to develop problem-solving strategies so that while they are identifying risks, they can also plan how to lessen those risks.
In our case, our managers don’t stick their heads in the sand. An organization is much healthier when managers can foresee situations and deal with them promptly.
Q: How hard is it to elicit necessary changes from staff who may be used to doing things a certain way?
A: Change isn’t always easy for people—including the folks at the top. Sometimes there are difficult conversations and you have to sort through agendas, defensiveness and embarrassment at all levels, especially if they’ve always done things a certain way or the communication hasn’t been efficient between departments. These conversations have to be focused on goals so that the company can move forward.
Our group discussions are very structured meetings. We take minutes. We have expected outcomes. And if the staff doesn’t have the tools to meet those expectations, whether it’s training on new equipment, or continuing education, or support, you have to supply it.
You have to roll up your sleeves, be open and lead by example in these kinds of encounters. Because in the end, you want to maintain the talent that originally created the concept or brand–they made the company.
Q: Under what circumstances is it too late? Is there ever a time when a company cannot be turned around?
A: If you wait too long, absolutely. But if you’re paying attention to the problems, and you’re willing to fix those foundational things, chances are you can resume growth. And you must keep an eye on the changing qualities of your competition—so you can surpass them. Finding and maintaining a talented staff that you can nurture and grow within the company is awfully important, too.
If you’re willing to do all that, “can’t” is not a word in my vocabulary.