Dave Mulder, partner at professional services firm Tatum, discusses handling a bankruptcy and the importance of understanding how facts are viewed by other parties.
What was the biggest challenge your company faced over the last 12 months and how were you able to overcome it with financial leadership?
Prior to Tatum being engaged, the sister companies Trade Union and Duck House were forced into a Chapter 11 bankruptcy, with the bank group driving for a liquidation. It was immediately critical to understand whether the two companies were indeed viable, and they were with the right plans and implementation. It was imperative to create a positive can-do attitude throughout the company and jump into the planning, negotiations and immediate improvement plans which were needed to prove viability to the outside world as we started intermediate and long-term planning for the business. Real estate was sold, plants were sold, deals were struck, unprofitable businesses were dropped, detailed working capital plans were analyzed, improved and analyzed again. By the time we walked into the courts to present our very detailed 5-year plan, we had enough cash for a 30 percent debt pay-down. We exited bankruptcy with a 3-year multi-level debt deal with 5 percent interest and no financial covenants.
What has made your company stand out and be successful financially?
Planning and motivational leadership. Management of the company also owned the company and drove its success for 25 years before the events that led to the bank issues. Management was willing and able to work through the financial models and plans and then to take the financial and operational steps needed to see to their company's long term success. We also kept the whole team motivated throughout the process with regular updates, group meetings and company lunches. Planning was conservative, based on facts and fully implemented. Over the 6 months I spent negotiating with the banks, every visit was accompanied by another report of a meeting plan. When the deal was finally done, the first thing management did was host a thank-you party for the whole company and vendors that stood by us.
What is the most important thing you’ve learned in your position?
We all know it is important to lay out the clear hard facts if you are going to work out a plan to get through a situation. It is equally important to understand how those same facts are seen by other parties involved and what is important to them. Once fully understood, you can then help articulate how everyone can best benefit in a mutually agreeable deal.
How do you prepare for board meetings and what information is most important for you to present?
I prepare for board meetings throughout the year. I prefer to do brief analyses and presentations to summarize where we are and what we are planning, and to share them with the rest of management regularly. I also encourage other members of management to do the same. Many of those brief communications pieces are later summarized for the board and put into a broader picture. In some cases when we need more information from an area or leader, I work with that person and the CEO to ensure we are coordinated. Additionally, I like to get all presentations ahead of time and coordinate to make sure numbers and plans are fluid and in agreement. When they are not, this process is helpful to my management team in getting them consistent. This process provides a good feedback loop for everyone, including me.
What advice do you have for other CFOs?
Ask questions; it makes you approachable and a valuable part of the team! Spend time getting an overview of the business from a financial and operational point of view. Putting together ideas in brief one-page models and short presentations is often helpful, but mark them "draft". Our viewpoints over the numbers give us critical input to the business, but we need to spend time with the CEO, the head of sales, the head of operations, etc. to understand what those numbers mean and how we can deliver them in the most useful format.
What do you do to retain your strategic vision despite the crush of day-to-day operations?
I often set aside a good block of time to think things through and study the numbers from new points of view. The best way to get this time is to put together the best team possible and empower them. You need to check their work, but I prefer to do this by analyzing the numbers to see if they make sense from a historic and a plan point of view. I always seek out the best controller I can find. I also try to break out one solid person from the accounting team to work on analysis or management reporting, so they help with some of the base analysis I need without being consumed by the day-to-day close cycles.
What’s your favorite book (for business or escape)?
As CFO of more than one business at a time, I sometimes find myself traveling. When I drive and am not on telephone calls, I listen to books on tape. Recently, I enjoyed the historic account of a young Irish sailor who joined the first English navy trip around the world in Golden Ocean. Right now, I am listening to Clive Cussler's Treasure of Khan. I like a good story with a great mix of historic background, bravado and some science.
Dave Mulder is a partner at professional services firm Tatum, where he provides CFO and CEO interim transitional support for private equity, public and privately held companies. Before joining Tatum, Mulder was chairman, president and CEO of Biolase Technology, CFO and chief operations officer for American LaFrance (previous Daimler Division) and CFO of Salton Inc.