Winston Mar, a partner and managing director of SierraConstellation Partners (SCP) in Los Angeles, provides advisory and interim management services to distressed companies that include setting strategic direction, performing creditor negotiation, and implementing productivity improvements. He has assisted companies in a variety of industries with their restructuring efforts, both out-of-court and in Chapter 11 proceedings, and has served in a variety of senior-level positions, including CRO and CEO.
Before joining SCP, Mar was a managing director with CRG Partners, where he worked on numerous high-profile cases, including Pilgrim’s Pride, which received a TMA Turnaround of the Year Award in 2010. He holds a bachelor’s degree in accounting from the University of Southern California and an MBA from the UCLA Anderson School of Management, and is a CPA, licensed in California. Mar is a member of the TMA Southern California Chapter.
Q: How did you gravitate into turnaround/restructuring work?
Mar: I started consulting after the company I was working for previously was sold, and I received a nice little package. I was able to find a little consulting gig at an infomercial company. When I did that, I started meeting people within the turnaround industry. Because of that, I ended up being a turnaround consultant.
One of the reasons I really like the turnaround industry is that you’re helping companies that are really having issues. I think that’s the key to what we do—to be able to effectuate change in a lot of those companies rapidly. With a lot of companies out there, if you get a 0.1 percent uptick in profitability, everyone’s ecstatic.
But if we don’t get a double-digit increase in productivity or in profitability, we’re not going to make it. You also get to see that—it happens relatively quickly. We effectuate change within a 90-day time frame in terms of operations. The things that we do really help a company. That’s how I gravitated to it and how I stuck with it.
Q: How long have you been doing it now?
Mar: About 20 years now.
Q: What have been some of your most gratifying or favorite engagements along the way?
Mar: One pops to mind now because effectively it was just sold. We were in there about three years ago. It was a telephone company in Ohio. When we got in there, they were very troubled. They were making a little bit of money, but they were loaded with a tremendous amount of debt, to the point that they couldn’t service it. Because of that, we became their advisors.
We were able to make enough operational changes to double their EBITDA. It was a family-owned business, and we were able to put in a couple of directors, which helped the business moving forward. Also, we put in a middle management team—a controller, a vice president of sales, and a vice president of ops. Adding both the operating guys and the board members to assist the leadership of the company lifted the entire company up. Because of that, they were able to take that company to a point where equity got out with a sizable amount. Before that, not even the secured creditors would have been repaid in full. And the management team was going to be able to grow the company going forward. It was quite a successful story.
Not only did we save the company but we also made it quite a bit better. At the same time, we saved a lot of jobs. They were able to provide better service than they had previously. They were able to grow the company significantly because of some of the assistance that we brought initially and then the expertise the board brought after we were done.
Part of the reason I brought up that example is to demonstrate how we have to effectuate a change in management when we go in there. Typically we have to assist management in getting better on a go-forward basis so that they don’t get into the same situations they’ve been in previously. What we’re pretty good at is getting people from bad to OK. We’re not the Good to Great guys; we’re the "bad to OK" guys—or actually, the "terrible to OK" guys. Then somebody else has to take it from OK or good to great.
Q: You have a limited amount of time, and if you don’t at least get them to OK, they’re gone.
Mar: From a turnaround standpoint, one of the things I do like to bring up is the fact that we’re not just financially focused. We also look to see intrinsically what issues the company has on an operational basis. I don’t believe that a financial restructuring alone typically does the job. Generally, you have a lot of operational issues that you have to fix in order for the company to regain profitability. And when you get the company more profitable, financial issues are easier to deal with.
Q: If all you’re doing is a financial restructuring from the get-go, you might buy them some time but that’s about it.
Mar: All the people at troubled companies that you talk to will say, “I just need more time.” The problem with that is, unless you do something meaningful with that time, I’m not sure what the benefit of time is. What we try to do is to extend the runway for most of these clients. The reason for that is that it buys us time to fix some things and then sell the company or whatever the case calls for. But if you think about it, the reason you sell a company is because your current management team is ineffective. I think we see very few troubled companies that have strong management teams.
Q: They’ve put the company in the position it’s in. Stronger management teams would have (a) reacted sooner or (b) actually addressed some problems so they didn’t need you.
Mar: Exactly.
Q: What role has your TMA membership played in your career?
Mar: Every time I go to a TMA event, I see people I haven’t seen in a while, and it allows me to reconnect with some of them. You see 50 people who you haven’t seen for a while. To me, the benefit of TMA is the networking it provides and the ability for us to connect to people.
Who do you deal with? You recommend or you gravitate to working with people you have relationships with. That’s really the benefit of TMA—it helps nurture those relationships.
Q: What advice would you have for someone who was new to the industry or was thinking about getting into it?
Mar: I think it’s a great industry because one of the things that I’m able to do is make changes and see the results of those changes in a very short period of time. If you take a look at most industries, a little change makes everybody ecstatic. Here, you institute monumental changes just to get them to a place where they can survive. The nice thing about it is you see the benefit of that and how well it helps. The process that you go through is very interesting.
I don’t think there’s another industry where you’re going to be able to make those kind of changes. They’re dangerous. If you make changes where you’re trying to increase your margins by 10 percent, there’s a possibility that it won’t work. You have to be flexible enough to adjust in case it doesn’t work correctly. You don’t have a choice. If you don’t get it to work, you’re not going to have a company left. That’s part of the excitement of this industry—during an engagement there’s so much going on, and you have to be so focused on making sure that the company improves on a daily basis.
Q: If someone had already talked to you and got excited by the things that excite you and they said, “I want to be a part of it,” how would you tell them to go about it?
Mar: I think part of it is make sure you have someone who is mentoring you, someone who’s going to be able to show you the ropes and to talk to you, someone you get along with. I think that applies not just to this business but to almost all businesses out there. You have to find somebody, particularly when you’re just starting out, who can show you the ropes and someone who has enough knowledge of this industry that you can call when you have issues.
I think our firm is pretty strong at making sure we are nurturing and constantly showing new things to the guys we have working here. That’s how you develop people. We have a very strong bench now of director-level people who have come up through the organization over the last four or five years. I think we’ve done a good job of mentoring those guys, to make sure they get on different projects and take on different roles so that they become more of a complete professional.
I think part of the situation with some of the larger firms is that younger professionals get pigeonholed into doing a year’s worth of preference actions, and they don’t really get to know all the other aspects of what a turnaround looks like. After a few years, they don’t have the broad base that they really need to get an overall vision to actually do a turnaround.
So I think part of being able to succeed in this industry is to have someone who is willing to mentor you and to make sure that as part of that process you’re exposed to all the different levels and all the different aspects of a turnaround.
Q: If you could start your own career over again, would you do anything differently?
Mar: I’ll tell you the same thing I tell my clients. Whatever happened in the past already happened, and you can’t really change that. The only thing you can really change is what you do going forward. That’s really what I take a look at—what are the things I can do to make where I’m at better, both from a client standpoint and a personal standpoint? That’s really, I think, what the focus should be. It’s kind of tough to say what you could have done differently because you really can’t change that.
Q: What about outside the office? What are you passionate about when you aren’t working?
Mar: How do you promote the next generation? I have two kids, a 21- and 23-year-old. The question I have is, how do I make their lives better? And when I say “their life,” I’m not just talking about my kids, but how do you promote future generations so that things are better for people in general, especially for my kids but also for other people?
And it goes back to when I was talking about the director-level guys and how you mentor them to make sure they’re growing. You also want to make sure that everybody else is doing the same thing to make sure that people have the opportunities to grow. That’s really some of the things we’re trying to focus on now. How do we get everybody growing?
Q: What do you like to do for fun?
Mar:I play a little bit of tennis. I’ve also been skiing a little bit. We really try to go out and get active. We live fairly close to the beach, so we take some walks along the beach, which is always kind of nice in the winter. To me, the winters in Southern California are the best because you can go down to the beach and there’s nobody there—60 degrees is cold to people here.
The funny thing is I’ve been working in Wisconsin a lot on an artificial insemination company as well as a cranberry co-op. I went to Manhattan Beach here when it was 60-some degrees a couple of weeks ago, and there was no one on the beach because it was so cold. At the same time, it was about -2 degrees in Wisconsin.
Q: What might people who only know you professionally be most surprised to learn about you?
Mar: I don’t think people who actually know me professionally would be surprised about much. I’m pretty transparent.
Q: Is there anything you’d like to add?
Mar: The turnaround industry has not been that robust over the past eight years or so now, but it goes in cycles. I think at some point in the next three, four, or five years we’re going to have a cycle again. I picture this industry being very strong for a few years when there are problems. Because I don’t think most firms have developed their younger talent, I wonder how much talent there will be to take care of those problems. I think we need to bring up some of the younger guys to make sure this is an industry that they’d be interested in to be able to take care of some of the cyclical issues we’ll have.
Q: Do you see anything sparking this next cycle? People have told me that 10 or 15 years ago, they had more time to address a company’s problems. They say there just isn’t enough time to do a full-blown turnaround the way they used to. Do you see things changing at all?
Mar: I think our job as professionals is to maximize the value of a company. We have to show people how we maximize value and what the cost is to try to accomplish that. Through our records of success in the past, we should be able to convince people that what we’re doing is preferable and to show them what the other options are that are less favorable. For example, you’re much better off with a company that’s to be sold rather than with a liquidation. There are very few companies that I’ve seen that are better off in a liquidation rather than a sale.
If there’s a way to increase the value of that company and do it with minimal risk to the other participants besides equity, and you’re able to show that to people, then there’s a likelihood that you’re going to be able to accomplish that. Our job is to show what the options are and to be transparent with those options in order for people to figure out what the best outcome is for each participant.
