Q&A with Nick Alexander

20/10/2020

Q&A with CRO Nick Alexander: Leading a turnaround during a pandemic

Six months ago, Rcapital bought a facilities management business right at the start of the Coronavirus crisis. At that time, no one could have predicted the profound effect this virus would take on both public health and the economy. The challenge ahead looked even more acute, requiring the skills of an experienced CRO to take a firm grip on the finances, bring confidence and quickly find a way to create a viable business for the long-term.

Following the acquisition, Rcapital introduced Operating Partner Nick Alexander to work alongside management, to provide the catalyst for change that would take the business through a deep and extensive turnaround programme.

With more than 15 years in senior leadership roles, Nick immediately put that experience to work. We caught up with Nick to ask what it has been like to lead a turnaround during a pandemic.

Nick, please introduce yourself.

I’m Nick, a company turnaround specialist working in the UK and overseas.

How long have you been working within the world of restructuring and turnaround?

Since moving into this space over fifteen years ago, I have worked in a number of sectors including; retail, manufacturing, distribution, business services, tunnelling, printing & packaging, events, newspaper and magazine publishing. The common denominator is complexity and difficultly. 

When did you start working with Rcapital and Trios?

The call came to support Trios shortly before deal completion. Within 48 hours the country was put on lockdown and what was already a particularly challenging situation was made much more complicated. Some big customers closed their doors, but our services became even more critical to others, such as hospitals and the police.

The early days of Trios definitely ranks high on the list of difficult situations. It’s unheard of for a CRO not to physically meet anyone at the company when they start work with a new team. No part of the business was untouched, and it is a credit to the customers, suppliers but especially employees that they have come through some significant changes with such a positive attitude.

How you would describe the phases of typical turnaround plan and how has it differed working through the pandemic?

The speed of this transaction limited due diligence which forced an accelerated learning curve about all aspects of the businesses. The lack of meaningful financial information in the early stages is not unusual but the difficulties of accessing people, particularly the middle management and being unable to watch the team dynamics horizontally and vertically made it in other ways more difficult.

In many ways, Trios followed a traditional three phase approach.

Phase 1 – Stabilise

Really understanding the problems, understanding the board and management teams and in some areas directly leading the business and, in this case furloughing a large number of people.

Phase 2 – Diagnose

Review key value drivers and the strength of management and produce a detailed plan of action for delivery and, in this case, introducing new leadership.

Phase 3 – Act

Delivery of the plan. In this case a CVA was deemed the most sensible course to reshape the business. The legal and financial advisors, at Begbies Traynor Group and Pinsent Masons LLP, were excellent and the whole team dynamic between management, advisors and Rcapital was instrumental in a successful outcome.

What have been the biggest challenges?

Firstly, the entire project has been operating during COVID so lack of access to people and offices was a major hurdle to overcome. We quickly got used to virtual meetings and we became more efficient without travelling. The positive side is that decisions could be put into action even faster and the ability to use the government furlough scheme helped establish a positive working capital cycle. To the government’s credit the furlough scheme helped save hundreds of jobs.

Secondly, the lack of information was compounded by a difficulty in accessing people and data to rebuild the models. In this instance we were also affected by a cyber-attack on the former owner which knocked out our entire IT platform. The attack was badly damaging and if we hadn’t acted quickly it had the potential bring down the business. However, Rcapital’s IT experts were amazing in rebuilding the entire company network almost over the weekend (setting themselves a new standard for the future!) but historic server data took weeks to recover which caused significant challenges for some time.

Thirdly, the challenges around the macro economy, the effect of COVID on our customers and supply chain were difficult to plan for. But again, the team was fantastic at responding to uncertainty because even more resilient. Eventually when other events occurred that in themselves might cause a business serious difficulty, the teams took it in their stride.

Someone commented ‘At first I thought this business was determined to kill itself but now I realise it was determined to survive’.

Have there been any benefits or opportunities of leading a turnaround during this time?

Yes, there have definitely been some;

Not having to travel

Faster delivery of decisions

Wider range of options

Easier communications to staff

A can-do attitude spread wider across the business

What do businesses need to focus on to stay competitive in this new business and economic environment?

In many ways the focus remains the same, that of focus on cash. The particular challenges come in the form of a macro-environment and the uncertainty at certain inflexion points. What is going to happen at the end of furlough? Brexit negotiations? How will quarterly rents and service charges effect customers? Changes to insolvency regulations? Second, third or fourth wave of the virus? You can spend a lifetime just wargaming – and there is a place for that – but remaining nimble and keeping eyes focussed on the road ahead remain key.

But mostly I would say to stay positive as there are fantastic opportunities ahead.

 

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