Howard Bailey, CTP, is a managing director at Arch + Beam LLC. He has more than 30 years of experience in banking and consulting, with more than 25 years in restructuring, loan workouts, and turnaround management. He has been an advisor and interim manager in multiple industries and has represented both debtor and creditor groups in and out of bankruptcy. Bailey moved to San Francisco in 1997 to establish the Western Region offices for BankBoston and later was with GE Commercial Finance’s Restructuring Finance Group,where he held roles in originations and was team leader for portfolio and underwriting.
Bailey is a board member of the TMA Northern California Chapter and past chairman of the Northern California Commercial Finance Association. He has spoken and served on multiple panels for a number of industry groups.
Q: You’re originally from the East Coast. Were you excited about moving to the West Coast?
Bailey: Yes. My wife was originally from California, so that didn’t hurt. As for the timing, I was with BankBoston, and we were opening an asset-based lending office on the West Coast, so it was a great opportunity to come out west.
Q: You stuck around, so I guess you liked San Francisco?
Bailey: I moved west with three young kids, all under the age of 4. Twins make you get settled quickly. The twins were almost 2 years old, and we also had a 3½-year-old.
It was good timing, a good opportunity. We started doing some tech asset-based lending, along with other emerging industries, so it was a great opportunity to try something different, and the bank encouraged people to get out and try new things.
Q: I saw you were doing workouts early on in your career. How did that happen?
Bailey: I started in banking out of undergraduate in the mid ‘80s, went through a management training program, and then what I consider to be the big recession of late ’89, early ‘90s, hit. So naturally many got thrown into workouts.
Q: It was an all-hands-on- deck situation?
Bailey: Yes. You’re in crisis mode. I was at Bank of New England. Bank of New England did go under, and I transitioned over to BankBoston, which was acquired by Fleet, and then Fleet was acquired by Bank of America. It was crisis time in banking. That was a pretty rough patch, so the natural place to go was to workouts.
Q: You eventually transitioned out of banking and into turnaround management. I think you’re the first TMA member I’ve encountered who took that route. Is that unusual?
Bailey: It is really unusual. In my banking career, I didn’t focus just on workouts. I did work on new business. We opened the office for BankBoston on the West Coast. I was involved in new business, underwriting, and portfolio management. At GE, I was responsible for the Western Region Restructuring Group and also managed a pretty good-sized portfolio. I resigned from GE Capital to pursue a passion and go into turnaround consulting.
For a long, long time, I really felt like I wanted to be more hands-on to help companies, especially middle market companies, through difficult processes. Having been on the other side has been a big plus in being able to do that.
The reason (TMA Northern California Chapter President) Matthew English and I are such good partners is I had 20 years of dealing with credit and capital issues. Matthew’s an operations guy. The combination of his incredible operational background and my banking credit-type background is very powerful.
Q: If you could start your career over again, would you do anything differently?
Bailey: Not really. I would definitely spend more time with the senior people of the banks and firms and try to really learn from them. There’s a tendency to stay within yourself and maybe stop after your formal training. Also, I did not join TMA until I was in a more senior role. Part of that was that we didn’t really have a NextGen program or anything comparable. I would encourage people, as they are starting their careers, to get involved in NextGen and get out and meet people at their own firms and others who are more experienced. You can learn a lot from that.
Q: So formal training programs are one thing, but people’s war stories are important, too?
Bailey: Yes. Learn from that and get involved as much as possible.
Q: What have been some of your favorite, most gratifying, or important engagements along the way?
Bailey: Being CRO of a multinational company where the situation was fairly bleak, looking like it was headed to disaster. We were able to get in and make enough changes to turn around the company and ultimately recapitalize successfully.
Another situation that comes to mind is one in which we were quickly thrown into a situation where we became federal receivers of the company. That company, too, was in rapid decline, and it was looking like hundreds of people were going to lose their jobs in a small town. We were able to work with the senior lender to quickly stabilize the company and sell it within four months to a strategic buyer who kept almost all the employees. And the company is still thriving.
Q: That four months did the trick?
Bailey: During that four months we were able to really stabilize the company and restructure its organization and how it did business. As federal receiver, we had full fiduciary, operational, and financial responsibility for the company. In that case, we ran everything. There was no board, CEO, or CFO—we were it. We were basically handed the keys.
Q: At what point during that period did you think, “This is probably going to work. We’re probably going to be able to save this company”?
Bailey: It was probably about halfway through, but we were always on edge. Maybe a month or so in, though, we thought if we could just have a bit of time, we could get things squared away. That’s where we partnered with the bank. We were able to convince the bank to support us through this process. It wasn’t like walk in and overnight—bang, bang, bang—this is fixed. It is a process and a partnership with the bank, vendors, and employees.
Q: Who inspires you professionally and/or personally?
Bailey: I put my dad in that category. My father immigrated to the U.S. from Finland after World War II. He didn’t speak English and didn’t come here with much. He was able to graduate college in pharmacy and started a small chain of pharmacies and ultimately started a real estate brokerage with my mother, who had been selling real estate.
To me, the ability to do that and show that just hard work on your own can develop into something. That’s what’s inspired me. It led me to be somewhat entrepreneurial. I had over 20 years in banking. I loved it, I had a great time, and I still have a passion for that. However, I knew my passion was to be entrepreneurial, and I knew I wanted to go into turnarounds and restructuring.
Q: How old was your father when he immigrated?
Bailey: It was not long after World War II when he came here, and he was born in 1934. He was probably 12. My grandfather had a brother here and there were a few other relatives. He came here for the opportunity.
Q: Was there anybody else you look up or you found especially helpful?
Bailey: I’ve had some really great managers over the years. I have learned from some really good people in business. I’ve always tried to take the best from everyone I’ve worked for.
Q: You touched on this earlier, but what advice would you have for someone who was new to the industry or was thinking about getting into the industry?
Bailey: For people getting into the industry, I’d get involved in the CTP (Certified Turnaround Professional) program. Since turnarounds involve so many disciplines—finance, accounting, law, and management—the CTP is really a great place to learn and get recognized for that learning.
Mentors are super-important. This is why we don’t reinvent the wheel—we can learn so much from people. Then getting as much cross-functional experience as possible is also important. I say they should not get holed up in one discipline. It is important to understand the intentions and desired outcomes of the different people in various parts of a case in terms of both the operational and financial sides. Finally, I would say network as much as possible. At the end of the day, personally and professionally meeting as many people as possible is a huge asset for anyone in this business. It’ll help you get business. It’ll help you all the way around.
Q: You also touched on this before, but TMA has played a big part in your career, correct?
Bailey: TMA’s allowed me to gain knowledge. We can’t learn everything from our mentors in our own market. I’ve been a panelist and a moderator on multiple panels. I have also spoken the past two years at the American Bar Association, California Bankruptcy Forum, and the Commercial Finance Association, among others. I’m doing one next month for the Bar Association of San Francisco.
I think being part of TMA and having had that exposure gives you a certain prominence and access to learning opportunities and networking. In a decent-size deal market like San Francisco, realizing how many TMA members are often part of a deal indicates just how valuable the network is. From that standpoint, TMA’s been extremely valuable.
Getting back to when I relocated to the West Coast, TMA gave me an instant foundation to start. Where do you go? You go to TMA because of multiple disciplines with bankers, turnaround advisors, and attorneys. It was a great place to get involved because I was familiar with it and it was a great transition. Ultimately, the CTP program is a way to demonstrate your turnaround experience. I was able to take advantage of the CTP Industry Veterans’ program. I encourage others with many years of experience to do the same, as the CTP is not only good for the individual but it’s also good for our industry.
Q: When did you get your CTP?
Bailey: November 2014. It has been valuable and is becoming more so. Industry leaders such as judges, bankers, attorneys, referral sources, are continuing to take notice and the brand of CTP is growing.
Q: So what about outside the office? What are you passionate about away from work?
Bailey: I have had three kids in college for the past two years. I have one graduating this year with a degree in wine and viticulture from Cal Poly, San Luis Obispo. Then I have one in college at UC Santa Barbara and one at San Diego State.
While I have been out here 19 years and I have taken to some of the local sports teams, people who know me know that I’m still a diehard Boston sports fan.
Q: What would people who only know you in a professional capacity be most surprised to learn about you?
Bailey: People might be surprised to learn that I have a pretty large passion for wine. Not only have we consulted in the wine space, which has been very personally and professionally gratifying, but I also have a local winery where I help annually with harvesting, crushing, and bottling. I’ve even been able to procure some custom, private label Arch + Beam wine as a result of that. It’s good for marketing and fun, too.
I have a bad habit of not being able to say no to good wine, so I have an abundance of it because it doesn’t go bad. I wasn’t shocked when my daughter majored in wine and viticulture, which is pretty exciting.
Q: What items are on your bucket list?
Bailey: It is a long list, with different family members and different places. I have Australia with my wife. Tustin wine country with my daughter, the wine/viticulture major. I have zip lining in a Costa Rica with my other adventurous daughter. Then playing golf at Augusta National or St. Andrews with my son, who’s played collegiate golf.
Q: You’re keeping it all in the family. Now, all you have to do is get them all through college so that you can afford it!
Bailey: I have one out and two halfway, so we’re getting there. Then the bucket list becomes a little more doable.
I remember when I was younger watching older people who were putting kids through college. I was making entry-level salary, thinking, "They’ve got kids in college. They’ve got a house. How the heck do they do it?" It’s what you strive to be. You think, “OK, people are really making successful careers out of this.”
Q: Exactly, and you have to choose your priorities.
Bailey: I still get grief at home because I do like to get good wine. My wife will laugh. My friend from the winery was at my house Friday night, so I opened a bottle of wine. It’s only a four- or five-year-old pinot that was highly rated, a wine of the year. I keep a log of everything. I paid $64 for the bottle. The current retail is about $125. I said, “Look, I paid $64 for a $125 bottle of wine. That’s a great turnaround!” My wife then looked at me and said, “Yes, but you still drank it!”