Hernan Serrano has over 25 years of experience in litigation, corporate recovery, turnaround management, and restructuring. He has worked as a financial advisor to law firms, investment banks, accounting firms, commercial banks, asset-based lenders, financial advisors, and corporations. He also has served as a trustee and receiver in numerous cases, including actions brought by the Federal Trade Commission.
Serrano is a certified New York state ombudsman, serving the healthcare industry. Formerly with the restructuring firms of FTI and CBIZ, Serrano received his MBA from Adelphi University and is bilingual in Spanish.
Serrano is a founding member and a past president of the TMA Long Island Chapter, and he currently serves as treasurer of the group.
Q: You’ve been in turnaround and restructuring work quite a while, right?
Serrano: I started at Arthur Andersen in 1985 with my MBA. At that time we called it special services, and we were all the nontraditional assignments of the audit practice. Anybody who didn’t fit into a traditional business model for audit came to us, and we did all the bankruptcy, restructuring, and litigation work.
The firmwide managing partner for the practice, Stewart Kahn, left to start his own boutique firm, and I think I was number six or eight at the new firm. That was KCI Consulting, which was eventually a part of FTI, and Stewart Kahn went on to become head of FTI.
Q: What have been some of your most gratifying or favorite engagements along the way?
Serrano: Because I’ve been in large firms and boutique firms, I’ve been lucky—I’ve done huge jobs, and I’ve done small jobs. One of them was a situation where the company had been managing wireless licenses. They were selling the licenses to consumers, and the licenses had to meet certain requirements in order to be effective and valuable. This company ended up defrauding the consumers who were buying the licenses.
It was a long engagement. There were many different facets that needed to be addressed. We were ultimately responsible for many of the licenses meeting the requirements to make them valid, which resulted in a sale to large communications companies. It was situation in which people who thought they had lost everything ultimately made a profit on the sale of their communication licenses.
I’ve also been fortunate enough to do smaller assignments. I worked on a family-owned poultry farm in a rural environment. We were able to get the bank to loosen the financial constraints they were experiencing. It was a traditional case. Here was a family-owned business that had religious and cultural ties and had been established by the owners’ parents. Ultimately we were able to help them not only sustain, but also to really grow their business through the evaluation of their business model. We brought them forward in their thinking, allowing them to communicate better with existing customers and to sell to newer clients.
They had never really raised their prices. They never evaluated their accounts receivable. Convincing them to do that—and that just because customers had done business with their father didn’t mean that they were good clients—took some doing because they’d been doing business with most of these customers for many years. It was a classic turnaround that resulted in a very positive situation for the family.
Q: Sometimes it seems like people lose sight of the fundamentals, and a lot of what you do is to go in and teach them to go back to the basics.
Serrano: That’s exactly it. It’s always being that outside voice, as in, “Listen, I’m sure your friend’s son is very talented, but this is not where he belongs. He should not be running your accounts receivable department.”
You go into businesses, and of course one of the first things you do is look at the disbursements. I really want to see every check that goes out the door. You find all the family members who are getting paid or who are on the payroll. What does this one do, what does that one do, and why do they drive a Jaguar, why are they driving a BMW when they’re not contributing? It’s always a sensitive issue that clients know about already, but don’t want to confront.
A lot of people don’t understand what we do. In my seven-second elevator speech to people who aren’t involved in our industry, I say that some people view me negatively because I sometimes have to lay people off, or I have to go through expenses and people lose the cars and other perks they’re used to. But I try to explain to them that if I can keep three-quarters of the workers employed so that this business can be viable, that’s just something that we need to do.
Q: If they run it how they have been, everybody’s going to be out of a job in six months.
Serrano: That’s exactly right. When I was at FTI, we represented a large debtor who was a perfect example of this situation. We had hundreds of employees, and we laid off 300 employees. But I also kept the other 700 working for six additional months. Someone asked, “How can you do that?” I said, “We’re still selling. We’re still manufacturing. We’re wrapping up the business so that we can maximize the recovery, and I’ve been keeping 700 people working. Would you rather that we keep the whole 1,000 working for two months and then let everybody go?”
We have tough decisions to make, but at the end of the day, I can put my head on the pillow and really feel that I tried to contribute to make things right.
Q: There are no easy answers?
Serrano: Unfortunately, sometimes there are no easy answers, easy discussions, or implementations. I had a client once that was one of the largest remaining manufacturers in New York City. They were still on Seventh Avenue in the old garment neighborhood. Their rent was sky-high. There was really one main designer. It was a large business that was still stuck in old-school managing.
I kept trying to explain that we had to move out of Seventh Avenue. “Why are we manufacturing here on four floors? It’s too expensive.” Profits were being strained and the owner controlled his employees, but not his business. There was no accountability. They were high-end and sold to very expensive retail outlets. They had a tremendous product line with a tremendous name, but made no money. Ultimately we had to sell the company and the name to ensure the owners would continue in the industry.
Q: Given your experience, if you could go back to the beginning of your career, would you do anything differently?
Serrano: I’ve been very fortunate. I’ve always left for better opportunities. I’ve had well-rounded experience by working in large firms and small firms and having my own firm with two or three partners. I think if I were starting again with the hindsight that I have, I probably would have stayed in one of the larger firms because of the platform. The platform of a large firm gave me the experience of doing much larger cases. In my large cases, there were always so many more intricacies that needed to be addressed and so many more problems that were impacting larger numbers of people.
I had an assignment that involved 458 convenience stores in the Midwest. It was a fantastic assignment because I had the platform that enabled the client to see how we could contribute. In some smaller firms, it’s hard to have that same platform. It’s difficult to have clients see you the same way, even though you have the same experience.
The problem with being in big firms is that you can’t do small jobs, and the small jobs are where you really get into the nitty-gritty. It’s not 20 people going out to start an assignment anymore; it’s myself and a consultant or two, and we’re the ones who are walking through the plant meeting the people. You’re really part of the process, which provides a whole different perspective.
Q: Which do you like better, or is it comparing apples to oranges?
Serrano: As much as many of the basic techniques and skills are very similar, it’s a different way of managing your client. In those smaller jobs, you really need to be doing a lot more hand-holding. You really need to be able to relate and communicate on a grass roots basis with many of the owners and the employees. When we’re doing large cases, it’s all filtered through boards, the CFO, and counsel.
Q: On the smaller cases, you’re dealing with people on an emotional level, while on the bigger ones, you’re dealing more with the professionals?
Serrano: Without a doubt. And your presentation to both the client and the law firm and the other professional groups that you’re working with is also very different. When I was doing large cases, we spent three days putting together our deck. When you’re working on smaller cases, there aren’t the resources or the time, so we don’t do that. It’s four or five pages in a key presentation with pure bullet points. It’s really a completely different way of doing business. I wish there were an environment that allowed me to do both because when you’re in the big firms, cost plays a big role in assignments. The structure of large firms just doesn’t allow you to do many of the small assignments. As much as the firms say they can, we’ve all seen the reality of that. It’s very different.
Q: What advice would you have for someone who was new to the industry or was thinking about getting into the industry?
Serrano: My advice would be that they need to keep a level head and their eye on the prize. And to me, the prize is always what is best for the client. With that, I think it’s important to get as much experience as you can with as many different types of assignments as possible.
I was always the first one to raise my hand, and I would go anywhere and I would do everything. Our job’s not only about evaluating and preparing financial statements and speaking with the client. I’ve had situations where I’ve had to move companies, and I’m the guy who’s sweeping floors at the end of the day because I need to make sure I can maximize my recovery and get my deposit back. I’m the guy who has gone to assist with an inventory of television sets because I know that when I sold these sets in a bulk sale, they told me that I was short.
I was there at 4 in the morning to meet the truckers to pick up all the holiday items and patio inventory that the bank had sold to recover their money. I needed to be there to make sure my client got proper credit. Nothing went out the door without me checking it. I had two staff people, but I was there with them. I’m a firm believer that if my staff can be there at 3 in the morning, then so can I.
I volunteer both professionally and personally. If you’re involved, then you’re part of the solution versus waiting for somebody else to resolve the problem or identify ways of making it better. I always like to be the guy who’s helping to make it better. Sometimes it goes my way, sometimes it doesn’t. But it’s remarkable that as you learn more, people start to listen to you more because you can contribute more.
Q: Do the people listening to you trust that you know what you’re talking about?
Serrano: Unfortunately, sometimes you have the chance to say, “I told you so.” We’re only advisors. I can’t force clients to do what I suggest. I can only say, “This is why I think this makes sense. These are the other options, but this, I believe, is the best one.” I can’t tell them how to run their business; I can only explain to them how to run their business better.
There’s nothing like that moment when they come back and say, “Well, I guess you were right and we should have done it that way.” Once they make a decision, I’m on board to try to make their decision the best it can be. I also have contingency plans because I know certain situations will come back.
Q: What role has TMA played in your career?
Serrano: TMA has really played a tremendous role in my exposure to so many professionals like myself.
I’m a founding member and a past president of our chapter. It was tremendous, because I had seen it grow from within. By the time I became president, I had already been participating on a national level, which is just so different from our regional positions and our local market. I was working in larger firms, so I was already traveling into other states across the country doing work in California and the South, so I was meeting people from all over who were part of TMA.
Meeting people and being able to work with people from local chapters of TMA was great. I would visit other chapters where we were working in other cities. We would determine if there was a TMA meeting, or we’d find people who were in TMA. “Oh, you should do this, and when you go to Grand Rapids, you should do this.” I’ve made some great friends that I only get to see every once in a while at the national TMA conferences. Now, social media and the technology world make it a lot easier for all of us to stay in touch. I wouldn’t have met these people without TMA.
Q: When you finally get away from the office, what are you passionate about outside of work?
Serrano: My family. I have two kids. They’re both in college now, so the dynamics have really changed a lot. But when I have them home, they are my complete focus. My wife and I do everything we can to make sure we have as much time with them as possible.
Like many people in my age bracket, I’m also responsible for aging relatives. I’m a New York state certified ombudsman. I volunteer and am the ombudsman for an assisted living facility on Long Island. I’m an advocate for the patients. That has led me to become the guy who, when my friends have issues, they call me. Everybody in my age bracket seems to be facing similar issues, whether it involves a parent, an aunt, or an uncle who needs some kind of attention. I myself have an 83-year-old father and an 86-year-old uncle that I take care of, and I’ve had others in the past.
All of that takes a lot of my time. My time commitments have shifted as my life has changed. When my kids were little, I was the Sunday school teacher. Everything went into my kids’ Sunday school and their sports. Now, I do a lot of other things that bring me pleasure. My kids and my family and my give-back are all part of that. It’s all about doing what makes you happy, I think.
Q: How did you become an ombudsman?
Serrano: I had a colleague who was retained as an ombudsman for a hospital. I have been a trustee in receivership and, because of my experience in trust and receivership work, he asked me to help him review all the financials.
Every assisted living, long-term care, or adult home in Nassau and Suffolk Counties on Long Island has a dedicated ombudsman to act as the advocate for the residents. They offer this program through volunteers because it would just be too costly otherwise. Many people in the ombudsman program are health care providers, social work people, educators, and there are a few financial guys. I am probably one of the youngest participants in the program. That’s really as a result of the time that is required.
I’ve always made it my priority to ensure that I give back. Personally it’s very rewarding, and I’ve learned a lot.
Q: How long have you been doing this?
Serrano: I am in my third year, and it took me eight or nine months to go through the training program. I don’t mean to imply that it’s eight months of intense training. The training programs are only done a few times a year, so the process is all based on timing. You complete an application and go through an initial discussion. Then you come back for an interview. You meet with another group of people after that, and then you go into the training class.
They don’t want anybody to be surprised at the end, so they are very clear about what the program encompasses. You are dealing with elderly people. You have to deal with their health care providers, with the business side of the environment, and with their families, and it’s emotional. You have to make sure to segregate yourself out of it.
I’ve had to deal with the personal and emotional side in dealing with my uncle and some other family members. I really learned how the system works and how to communicate with people and let the health care providers know that you’re there and available. All those things, I think, have made me a better ombudsman because I’ve seen it from both sides. I get it.
I got a call the other day from the activities director at my facility, and she said, “I started this glee club. I want to sing for one our past residents who’s now in a long-term care facility. What can you do for me?” In the whole scheme of things, it’s not really all that important, but to my residents, it’s extremely important, so to me it’s important, too. So now we’re working with the activities director through the ombudsman program to allow them to do it.
Q: What’s on your bucket list?
Serrano: My goal is to be able to live in different parts of the world for two to three months at a time, and not just visit. I’ve had this infatuation with living on the Grand Canal in Venice, and I keep telling my wife we’re going to live there. I’m fluent in Spanish. I can understand more Italian than I can speak. I’d like to be able to communicate like a native.
I would love to live on the Great Wall. There are communities in China within the wall itself, and you can go and live there.
They take people with certain backgrounds to teach English as a second language in places like Spain or China or Japan. My son participated in one for Spain, and it turns out they do the same thing for adults. You stay within their facilities, and you meet all these people who are looking to learn English. It’s all conversational, and you’re exposed to their culture at the same time. All of those things fascinate me.
I still want to get to Greece. I would love to live in Capri in Italy for a couple of months on an isolated island that’s so beautiful and where you get to know everybody. There are parts of South America that are just beautiful where I’d like to see if we could live for a couple of months. I’m not so much looking to rent a villa and live like a king in Tuscany, but I wouldn’t mind a little studio apartment in a medieval city in Portugal for a while.