Timothy G. Becker, CTP, founded Lighthouse Management Group Inc. in 1993 with Jim Bartholomew, CTP. Becker has more than 20 years of executive-level financial management experience working with distressed organizations to develop and implement pragmatic solutions. His client list includes public and private companies with annual revenues up to $600 million and in industries as varied as food production, transportation, retail, technology, energy, and real estate. He has served as both CEO and CFO of distressed companies and has served as a court-appointed receiver of numerous entities.
Prior to founding Lighthouse Management, Becker was a senior manager with Ernst & Young, where he led the efforts to establish the Restructuring and Reorganization practice in the Minneapolis office. He is a CPA and holds a bachelor’s degree from the University of St. Thomas and an MBA in finance from the University of Minnesota. He continues to serve on the boards of directors of numerous public and private companies.
Q: How did you gravitate into turnaround and restructuring work?
BECKER: I had finished my undergrad degree at the University of St. Thomas here in St. Paul and was going into the MBA program at the University of Minnesota when I read an article in the local paper about a guy who was doing turnaround work. It was a story about how he had gone in and advised a company that was struggling and losing money and how he helped them turn around and become successful.
I thought that was really intriguing, so I called him and asked if I could come in and talk to him about what he was doing because it sounded fascinating. We had a nice 45-minute meeting at his office. Then about two years later, he called me and asked if I’d be interested in working for him. That was in 1985.
The other experience that influenced me to gravitate toward turnaround work was growing up on a farm in west central Minnesota. During the farm crisis in Minnesota in the '80s many family farmers went out of business. Extended family members of mine went through bankruptcy and lost everything. In one case it was a farm that had been in the family for several generations. Seeing the personal anguish that people go through firsthand was something that affected me deeply, and I found that being able to help people and businesses in distress was very rewarding.
Q: The mid ‘80s was early on. They probably didn’t even call it turnaround work at that time.
BECKER: No, I don’t think they did. It was just called consulting. We were working primarily with companies that were in trouble, and we had just gotten a reputation for that. There wasn’t a Turnaround Management Association, and there certainly wasn’t any kind of organized effort of people, at least not here in Minnesota, who were involved in it.
Q: You’ve been doing this work a long time. What have been some of your most gratifying, favorite, or important engagements along the way?
BECKER: We were a court-appointed receiver in a Ponzi scheme in which a number of investors lost substantial amounts of money.
Being involved in that and getting into the details—finding assets, recovering them, converting them to cash, figuring out who lost money, and ultimately creating a structure and a process around how that was accomplished—was pretty gratifying. We ultimately were able to take what was a really bad situation and achieve an outcome that was remarkably good, returning substantial amounts of the investors’ money. We received a chapter Transaction of the Year award for that project.
It was different from a typical turnaround, in that we weren’t just trying to fix a business and turn it around. Here we had situations involving individuals whose lives were on the verge of being destroyed from the loss of an investment, but we were able to capture and recover a good portion of what they had invested.
I was also fortunate to be on the committee that crafted and rewrote the Minnesota statute for receiverships and assignments for the benefit of creditors. It was a terrific experience going through the drafting of the law, particularly the care that we put into considering all the ramifications of the language and how the law would work and trying to make sure that it accomplished what it was intended to do. We ultimately saw the bill win bipartisan support in the Minnesota legislature and be passed into law. It was really gratifying.
We’ve had the opportunity to work on a number of projects since then in which we were appointed as receiver under this statute, which now has been in place for several years. We used it about a year or so ago when we were appointed as receiver for a large biomass fuel power plant in western Minnesota. The receivership statute and its provisions worked well to achieve a sale of the facility through the receivership process, keeping it operating during the process and after the sale.
Probably the most complex engagement I’ve been involved in occurred in the last seven or eight years. We were retained by one of the country’s largest real estate development companies during the real estate market meltdown. Capturing and preserving as much value as possible were paramount. It was complex because of the reach of the organization across the country and the multiple subsidiaries and how they were structured. Ultimately, we ended up with a very favorable outcome for all parties.
Q: I want to go back to the Ponzi scheme case for a minute. That sounds fascinating. How large was the fraud?
BECKER: The total claims that were filed at the time the case unraveled amounted to about $50 million.
Q: What did the scheme involve?
BECKER: It was an individual who claimed to be a print broker who was seeking to finance his purchase orders. He would present to his investors substantial purchase orders, typically to large Fortune 500 companies. Virtually all of them were 100 percent fabricated.
Q: How long had it been going on before it unraveled?
BECKER: I think it had been going on for about four years.
Q: Did authorities bring criminal charges against the perpetrator?
BECKER: They did, and he was sentenced to eight years in prison in Minnesota. After he had served a couple years of his sentence, he was extradited to California, where he was charged separately. I think he just was sentenced to 30-plus years in California.
Q: Regarding the committee that addressed the receivership statute, can you talk a little bit about how that came about? What were the perceived weaknesses in the existing statute?
BECKER: My firm had been involved in a number of receivership cases in Minnesota. The statute on receiverships was really minimal at the time. We were finding from case to case and across different venues that judges’ orders in terms of what sorts of power and authority they granted us as a receiver varied greatly.
With the committee, we were trying to clarify those issues and create a comprehensive statute that would put a framework around this process. Since it went into effect, we are seeing it being used more and more in Minnesota.
Q: You are a longtime member of TMA and were one of the original members of the Minnesota Chapter. What role has TMA played in your career? When did you get involved with TMA?
BECKER: I was generally aware of TMA nationally from my time at Ernst & Young. Although I started the practice for restructuring and reorganization here in Minneapolis, I was working with a number of other offices, such as Chicago and Los Angeles, so I had a fair amount of exposure to professionals across the country who were involved with TMA. When the opportunity was presented to help with starting a local chapter, I thought it was a great idea and I was eager to get involved.
For professionals like myself and others who participate in this arena—the lawyers, bankers and lenders, private equity, and all the ancillary professions that it touches—TMA has been a great vehicle for networking with each other, helping us understand who’s doing what and who has strengths in one area or another.
I’m a CTP, and I believe the certification has been really valuable for me, particularly going outside this market or if someone outside this market happens to be looking at our credentials. People who are familiar with it understand what it means, so they recognize that you have capabilities and experience for these types of engagements.
Q: What advice would you give someone who was new to the industry or was thinking about getting into the industry?
BECKER: I believe in this line of work the most valuable things we bring to the table are our experiences. We’ve gone through difficult situations, understand where pitfalls are, and have developed skills and abilities to manage through them. If you’re starting out, the question is always, “Well, how do I get experience?” I think one way—and maybe the most important way—is to find someone who can share that with you and who you can work with to gain those kinds of experiences. You can use that and leverage it as you build your career in the turnaround business.
Q: What about outside the office? What are you passionate about when you have time to spare?
BECKER: I’d have to say it’s spending time with my family. My wife and I have three children who are now grown. None of them live at home any longer, but we still try to get together as much as possible. My two daughters live here in Minneapolis, so we are fortunate to see them often, whereas my son lives in Denver, so we don’t get to see him quite as often as we’d like.
We also still try to go on annual vacations with the whole family. Last year was a ski trip to Breckenridge, and the year before, we went to Napa Valley and the surrounding wine country. We’ve also gone as a family to Puerto Rico. With the kids being adults now, it gets more difficult for everybody to get time off to get together, but we still try to do it as much as we can.
Beyond that, a couple of years ago we built a home on the lake, so we love spending time there and having family and friends over. We’re out on the water a lot, whether it’s kayaking or fishing or just simply floating around on the boat and enjoying the sunset and a glass of wine. We just love hanging out with family and our friends.
Q: Are you into any type of fishing in particular?
BECKER: This past year I discovered muskie fishing, and it’s something that sort of gets in your blood. People laugh because when they ask how many I’ve caught, my answer is unfortunately zero, but I’ve had a number of follows! I’ve been in the boat when other people have caught them and it’s very exciting. It’s my hope that in the next year, when I get a little more time on the water, it will happen.
Q: I’ve also heard that you dabbled with owning racehorses. Were they thoroughbreds?
BECKER: Yes. I and a couple of partners had two horses that we raced primarily here in Minnesota, but in six different states and Canada.
Our most notable race involved a gelding we had that raced here. He was in the Minnesota Derby, which at Canterbury Park was the largest race of the year. Our horse went off at odds of 29-1 and he won. It was a big deal.
Q: Did you have $100 on him?
BECKER: I had some money on him.
Q: What would people who only know you professionally be most surprised to learn about you?
BECKER: I grew up on a farm, so ever since I was a kid, I’ve been an outdoors guy. When I was in high school, in woodshop I made a bow and arrows. I started target shooting with them and realized I could use the set for hunting. I started bow hunting, primarily for white-tail deer, and found that the best part of it was the solitude of being in the woods. To this day, I spend a lot of time in the woods quietly doing my thing. Being in the outdoors is something I really cherish.
Of course not with the same bow—I’ve had several since then—but I was able to take a white-tail deer that is in the Pope and Young Club record book for one of the largest white-tail deer taken in North America.
Q: How big was it?
BECKER: It was a 13-point, but the official measurement is based on inches for the size of the rack and the points. Mine had a gross score of just over 161, which is pretty large. It’s not the largest deer shot, by any means, but it was an experience I’ll never forget.
Q: I’ll bet it felt a lot bigger while you were dragging it out of the woods, didn’t it?
BECKER: It sure did.