Kevin Dowd will tell you he has the best job in the world, even though at times it requires him to play corporate mercenary. He is a hired gun who is summoned to take on a distressed business, sometimes at the 11th hour, 59th minute, in an effort to turn the company around or at least salvage some assets for creditors.
Dowd, a principal at Nightingale & Associates LLC for the last 10 years, has been the CEO of 31 companies over the years. His jobs have encompassed a wide range of industries – consumer electronics, real estate, industrial ball bearings, consumer furniture, aircraft, ocean shipping, office products, retail and wholesale distribution, health care and medical equipment, and restaurants and agricultural cooperatives.
It is a difficult job, taking over as the top gun in a difficult time, facing creditors, debt and perhaps angry employees. The work may last a year, rarely more, and there is no time – or budget – for office furniture or Town Cars or any of the other executive trappings.
Dowd must size up the situation quickly, interview every layer of management and speak with perhaps eight to 10 employees a day to gain a better understanding of the firm. Dowd described this process as a mosaic that is put together, piece by piece. His expertise is operations and financial analysis, assisting management and the various stakeholders in identifying and implementing workable solutions to crisis situations. During these critical moments, Dowd is often the messenger of unpleasant news. Laid off employees likely will receive no severance, the result of a bankruptcy filing in which creditors are lining up to collect and the courts won’t allow severance.
It is a sign of the times that business has never been better at Nightingale, which has added three principals (there are nine in all), five managing directors and 17 associates all in the last three years to keep up with exploding demand. The firm receives at least two new business calls a week, and keeping up with that pace is taxing on the staff.
“Everyone in this business is doing the same thing. We’re not alone [in the business spike],” he says. “We could have grown much faster, but frankly, you’re only as good as your last project, and if we spread ourselves too thin, we won’t have the capacity to do the job.”
Nightingale as a firm will not accept an assignment unless one of its principals can work on it.
The downside to the business is that Dowd is always on the go. A glance at his recent travel itinerary bears that out. In a not-untypical whirlwind, the Stamford, Conn.-based Dowd recently traveled to San Jose for a Monday-Tuesday stop; flew to Denver for Wednesday and Thursday; to New York on Friday, then to Phoenix on Saturday for three days, before heading back to San Jose again. The following week was spent in Cincinnati. “We are rarely in the office,” he says. “The demand is extraordinary – it’s unbelievable. “
Despite signs that show the economy improving – a stronger stock market, evidence that the recession is over – Dowd doesn’t sense any upgrade, at least not based on indicators on which his firm relies. “We’re still seeing companies defaulting on their loans and bonds – there’s a large volume of it, and no end in sight,” he says.
In good times or bad, Nightingale’s broad range of services – a strong record of performance in divestiture and asset-recovery assignments, turnaround and profit-improvement projects, resolving difficult negotiations among parties with differing agendas – are always in demand. Plus, Dowd says, “There’s a segment of the industry that will always be in trouble. It is now, and will continue to be that way.” In the near term, Dowd will focus on current distressed areas, like telecom companies, where too much capacity exists.
Distressed businesses fail for various reasons, but usually it can be traced to a weak economy, over expansion or taking on too much debt. The vast majority that go into bankruptcy don’t survive. Even if they come out of the restructuring, they’re apt to ultimately fail because in the past banks focused on the capital structure and let the more vexing operational woes go unchecked, he said.
Dowd estimates that 85% of business failures can be attributed to operations, namely senior management and the board operating with the wrong business plan or having an inability to execute a good plan. What’s more, buyout firms tend to err by simply putting a new CEO in, or waiting too long to recognize the extent of the problem. “Not all CEOs can come in and fix it,” he says.
The good news is that bankers are moving quicker today to rescue failing companies and are recognizing the operations side of the equation first. In addition, despite the number of failed companies dotting the economic landscape, Dowd says companies today (excluding dotcoms, which his firm does not touch) are better run than they were a decade ago. That’s because they are far more sensitive to the importance of management information systems than ever before, and they are much more efficient in streamlining processes and cutting out waste.
Having witnessed American business through the prism of a workout pro, Dowd was asked which business he would start if given the choice? “The business I would like to go into is the one I’m in today,” he says. “I’m very passionate about it.”
Kevin Dowd’s Fact Sheet
Favorite Movie: Anything of escapist value that is well done. Given the work that we do and the times that we are in, anything that takes some of the stress away is well received.
Favorite Book: Self Renewal by John Gardner.
Favorite Quotations: “It is what it is!” (In our business, this is an axiom!); “What we don’t know, we teach each other”;
“An unreasonable argument, however reasonably presented, is still an unreasonable argument!”
Favorite Historical Figure(s): George S. Patton (A great man and soldier. Terribly
misunderstood and maligned, but a true hero; the perfect man for the perfect
assignment); Pope John, the 23rd. (A visionary whose impact on one of
the three great religions will be felt for generations to come.)
Pet Peeve: Discourteous people, especially in airports and on golf courses.
Favorite vacation spot(s): Anywhere with my children and grandchildren, but especially scuba diving on Little Cayman and at Grand Bay in Manzanillo, Mexico.
Cars: Jaguar XK8 convertible and Land Rover.
Hobbies: Golf (9 handicap), flyfishing, scuba diving, and traveling.
Family: Four children, one girl, age 33; and three boys, ages 30, 27, 26. One grandchild and another due in August.
Home: Arizona and Connecticut.