Brian Davies is a managing director and practice head of Capstone Headwaters’ Financial Advisory Services (FAS). He is responsible for the firm’s corporate restructuring, transaction advisory, and specialty M&A operations, as well as managing client engagements. With 20 years of experience in transaction advisory, business reorganization, and interim management services, Davies has provided financial advisory services to lenders, debtors, creditors’ committees, trustees, and equity holders in bankruptcy matters and out-of-court restructurings. He has advised and worked with financially distressed companies in a variety of industries to develop cost containment and asset rationalization plans, improve liquidity, re-engineer financial and other back-office functions, and enhance cash flow.
Previously Davies served as an operating partner in a global private equity firm focused on management buyouts and recapitalizations of middle market companies, as well as growth equity investments. He has served as an interim C-level manager, sat on the boards of portfolio companies, and partnered with deal teams on both buy- and sell-side diligence and negotiations. Before that, as a managing director and co-head of Mesirow Financial Consulting’s New England Practice, Davies spearheaded national projects ranging in size from $10 million to more than $30 billion in total revenue and focusing on the overall turnaround of at-risk operations within diverse and industry leading clientele platforms.
Q: How did you gravitate into turnaround/restructuring work?
Davies: When I got out of grad school, I wanted to stay in the Boston area. I’m from Boston, and my family’s around here. I was considering investment banking for a while. The Corporate Finance Group at Arthur Andersen had both investment banking and corporate restructuring in it. Ultimately, I started my career there, and from day one, I started working the restructuring side of the house. I really enjoyed that type of work. It’s more in-depth operational work than investment banking. I grew to really like it.
Q: What have been some of your favorite or most gratifying engagements along the way?
Davies: The first one that comes to mind was a company that was in the distribution space. This company was at one point a high flier, growing rapidly. They were tied in some regards to the real estate market in the product that they sold. As they continued to grow, they did a couple of things wrong: one, they let the technology start to pass them by, and two, to try to diversify their product line, they purchased a similar type of product but in a different space. They didn’t do a particularly good job in the diligence of that particular company.
Within six months, the company they purchased ultimately had a major recall of their major product line. So, for the most part, all was lost on that particular acquisition. The bank put the company into default due to covenant violations. We were soon hired as the interim CFO. We worked through many of the tactical liquidity concerns, which ultimately gave the company additional runway to get things under control.
I like to call it an old-school, hard-core restructuring—kind of the way we did things 20 years ago. This one required shutting down and liquidating the firm they just bought. Negotiating with the bank was difficult, as you can imagine. The company had just used the bank’s money to buy those assets, and we liquidated them for pennies on the dollar. We took a real hard look at the core business, and that business had to get smaller to get profitable. It was difficult in the sense that there were many layoffs. At the end of the day, though, I like to say we laid off 30 percent of the workforce, but we saved 70 percent.
Within 12 or 14 months, that company was profitable for the first time in years. The family ownership group couldn’t have been more pleased. It was really nice for us to watch this family, which had been on the doorstep of bankruptcy, see real value in their business again. The company has strong roots in the community and employs a lot of people. Seeing how this company acted as a family and was able to keep its doors open was gratifying. They continued to grow, and they are still growing.
That was one deal that I really enjoyed working, and I try to stay in touch with those people even to this day. It’s been a couple of years since we did that deal.
The second one is more on the transactional side. We do a lot of transaction advisory as well. We were hired by a client that had the mandate to grow by acquisition. They weren’t growing organically fast enough. They are private equity-backed. Capstone and management developed and executed a plan that helped this company grow from about $69 million in revenue to about $200 million in revenue. In doing so, we assisted them in acquiring six different companies.
We planned and executed all aspects, from diligence to integration and synergy attainment plans sequentially over four years. Now, that company is one of the largest regional businesses of its type in the Midwest and continues to grow.
Q: Integration often trips people up. Did you have any trouble with that? Had you worked out a system that headed off some of the problems that others run into?
Davies: I think it’s the latter. Although some people don’t quite see it the same way I do, I believe doing restructuring work for a living sets you up well to do transactional work. My team has some of the best CPAs, accountants, and finance professionals you can find. When our team is engaged for an integration project, we can draw on the best CPAs and finance professionals in the firm to put an actionable plan together. We take a hard look at the accounting systems, how things are mapped, how data are pulled in, as well as all the operational aspects needed for a successful integration. Our clients are always happy with how quickly we’re able to get the newly integrated business fully and efficiently functioning. We’ve never really had a problem with integration.
Q: What role has your TMA membership played in your career?
Davies: I’ve been part of TMA for a long time. It starts early in your career as one of your first networking tools. It plays a key role for younger members to start getting to know other professionals in the community. That wasn’t any different for me. As you progress through your career, you build friendships with these professionals. It certainly helps when you know the person on the other side of the table when you’re negotiating deals. I believe TMA fosters and supports these relationships. And finally, TMA-sponsored education events are usually timely and insightful.
Q: What advice would you have for someone who was new to the industry or was thinking about getting into the industry?
Davies: This one is a softball question for me, because I often talk about this when I interview young professionals looking to get into this industry. I think people need to understand what they’re getting themselves into in the restructuring world. This type of consulting is unique. If you’re the type of personality who enjoys a very stable and predictable day, if you feed off having that stability in your work life, this is not the career for you.
If you’re somebody who enjoys having a lot of balls in the air at all times, problem-solving day in and day out, having different issues thrown at you all the time, and often having to get on an airplane to solve those problems, you should get into this business. A lot of people leave the industry because it’s not predictable. If you enjoy having the constant challenges, the constant changes of scenery, like I do, then it’s a great career, but I have talked people out of entering this industry. People really need to understand what they’re getting into. If you’re the right personality, you can do phenomenally well in a restructuring career.
Q: If you could start your career over again, would you do anything differently?
Davies: The only thing I think I would do a little differently is that I would have started my own practice earlier in my career. It’s very difficult to take that leap from the comfort of the Big Four or the comfort of private equity. But once you take the leap and start your own business, it’s very gratifying. You don’t know it until you do it. But if I could turn back the clock and know then what I know now, I probably would have done it sooner.
Q: How long ago did you start your practice? What finally led you to take the leap?
Davies: We are in our ninth year. It may sound odd, but what led me to take the leap was my kids. In this crazy career that we all chose, you’re on the road often. At some point the only way to take control of your travel schedule is to do one of two things—get out of the business or make sure you’re the one controlling it. There’s no way that you’re going to control your travel schedule working for the Big Four or the large consulting firms. You’re told where to go, no matter what level you are.
I started thinking when my kids were young that I wanted to be in control of when I was on airplanes and when I wasn’t, and the only way to do that was to start this practice. I’d been thinking about it for a long time. My current business partner, John Ferrara—he and I worked together way back in our Andersen days—had started Capstone’s Investment Banking Group. He’s been running that ever since very successfully. When I started my group, we wrapped it underneath the Capstone umbrella and went from there. Now as a firm, we’re 155 strong and hopefully continue to grow.
Q: What are you passionate about outside the office?
Davies: I enjoy outdoor sports. I enjoy running and skiing, but what my passion has become over the last 10 years is climbing. I’ve done a fair amount of climbing. I want to continue to do so and hopefully stay healthy enough that when I actually retire I can do a lot more of it.
I spent some time on Mount Everest a few years back. That’ll really get you charged up for anything. Now we’re doing a lot of the local, closer-to-home climbs, like the 4,000-footers in New Hampshire. I’m trying to plan another big trip in the next handful of years—I’d love to do Aconcagua in Argentina. Hopefully that’s on the horizon.
It’s one of my passions that I pursue when I can. It’s just a very time-consuming hobby.
Q: I would imagine just keeping in shape to do that would take a lot of time.
Davies: It does. And then if you climb any of the big mountains, just getting there, logistically, and the amount of time you’re on the mountain often require a significant number of weeks. With all of our busy careers, it’s difficult to have too many of those big trips. That’s why we do a lot of local climbing.
Q: What makes it worth all of the time and effort?
Davies: Challenging yourself. I grew up playing team sports. I love team sports, both as a participant and a spectator, but climbing is something that forces you to push yourself more than most anything I’ve ever done. You’re challenging yourself.
Q: How did you get into climbing?
Davies: It was almost by accident. A close friend of mine who hadn’t done much climbing himself decided he wanted to do a 14,000-foot mountain out west. He asked if I wanted to go along, and I said sure. We hadn’t trained or done really anything to prepare for it. It’s not the smartest way of doing it. I’m much more prepared now than I was back then, but we just planned the trip, flew out there, and did it. I really enjoyed it and continued from there.
Q: Have there been climbs that stand out for you?
Davies: The Everest climb was fabulous. We didn’t set out to summit because that takes way too long, but it was a fantastic climb. We were on the mountain for about 14 days. It was very challenging. The people on the mountain were just wonderful, wonderful people. The whole experience was indescribable. That, no question, is a very difficult one to top.Q: How did that climb come about? Were you with a group?
Davies: It was a friend of mine’s 40th birthday, so eight of us—he and seven of his closest friends—decided to do it.
Q: Do you have any other passions outside the office?
Davies: I’m an avid sports fans. I love our local teams here in Boston. I go to as many games as I can. I watch as many games as I can.
Another obvious passion of mine, of course, is my children. I spend a significant amount of time with my boys. They probably take up more time than all of my hobbies combined, but it’s probably the most gratifying thing in life. I think most parents would say that.
I’ve also been riding Harleys for a good portion of my life, and I still have one. I don’t use it for commuting because driving into Boston on a motorcycle is terrible. I enjoy going up the coast on weekends. We just really enjoy the bike.
Q: What might people who only know you professionally be most surprised to learn about you?
Davies: I think what most people are surprised to learn about me is that I have a different background than most people who get into this world. My father was a successful business owner and mechanic by trade. I’m a self-proclaimed grease monkey. That’s another hobby of mine. I grew up in a garage fixing cars. When I decided it was time to go to college, I went to school for aviation. What most people don’t know is I’m still a licensed and certified aviation technician, and I put myself through college hanging engines on Delta aircraft.
Q: Why did you decide to go the direction you did rather than remain an aircraft tech?
Davies: At 18 years old, when you’re heading off to college, you don’t really know what you want to do. I have a 17- and a 19-year-old. They think that they know what they want to do, but we’ll see. I thought I wanted to be an aircraft technician for the rest of my life, so I went to school, got hired by Delta, and loved it for the first handful of years. I made the closest friends of my life there. They’re still my closest friends to this day.
Three or four years into it, I realized I wanted to do something more, so I started looking around. When it’s 2 o’clock in the morning at Logan Airport in Boston and it’s zero and you’re freezing your tail off while you’re trying to hang an engine on an airplane, it isn’t hard to conclude, “This is not what I want to do when I’m 60.” I started taking some classes here and there, got very interested in finance, and the rest is history.