Pierre Marchand is a partner on the corporate restructuring team at MNP, Canada’s fifth-largest national accounting firm, in Montreal. He has more than 20 years of experience providing financial advisory and restructuring services. In addition, Marchand has served as a volunteer coach for the Association du hockey mineur de Varennes since 2007 and as member of the board of directors for the TMA Montreal Chapter since 2016.
MARCHAND: I’ve always been in restructuring, either as an employee or as a consultant, even when I was young. My parents had a grocery store, and I was involved in the management of it. I was constantly reviewing and changing processes to make them more effective and more productive. I always wanted to change things.
I was also really inspired when reading about Lee Iacocca’s work on the restructuring of Chrysler in the ‘80s. It looked like a cool way to make a living, going into distressed companies to make things evolve and bring them back to profitability. That’s been the driving force behind my career.
I was still working on my master’s degree when I was approached by a hockey buddy who asked if I was interested in joining his company. He felt he had a project for me. It was a large, Quebec-based cable company. It had a monopoly at that time, but the rules were changing. They changed the law, and it was becoming a competitive environment. The question regarding the company for me—and it became the topic of my master’s thesis—was, how can we adapt the business to successfully transition from a monopoly to a competitive environment? So, I was very lucky to jump into the field of restructuring before I finished my education.
After that, I worked for a large bank, the National Bank of Canada, in Quebec. It involved a new challenge—to rethink their electronic payment solutions division. Their main product was Mastercard credit cards. They asked me to review their accounting and financial analysis models and suggest how they could be more efficient. I was promoted to strategic planning manager. Once the new processes were put into place, I wanted to move into consulting and continue working on change management projects, but with a variety of clients.
MARCHAND: It’s true that that one was really important for me. Once I moved into consulting, one of my first mandates was for a private company. I was a young consultant. I wasn’t the partner on the file, obviously. I was on-site for a few weeks doing the diagnostic, looking at the cash flows and developing a plan for the company.
At one point, the entrepreneur took me to lunch, and we had a tough talk. He didn’t think I understood his business. He thought his business was so special that no consultant could make a diagnosis and help them. I had to walk a fine line and tell him what I thought he had to do to save the business, namely that he was going to have to sell some of his assets, like luxury cars and condos, and inject that money into the company to finance some parts of the restructuring plan. Only then could he to save the company today and make it grow later. He was really angry at me, and we did not leave on good terms that day.
But when I came back to his office the next day, he said, “Look, Pierre, that was not an easy discussion for either of us. But please, sit down and let’s discuss your plan a little more.” So in the end, I had made my point during that difficult lunch, and the entrepreneur understood what he needed to do. He made the changes that were required, saved the company, and became profitable again.
After all of that, we stayed in touch. That’s part of what makes me proud of my job. We often meet our clients during one of the worst periods of their lives. They are struggling, trying to save their company, and sometimes we are able to create a good relationship with the entrepreneur that lasts long after the file is closed. That was a big accomplishment for me at the beginning of my career.
MARCHAND: No, and that was part of the problem. To save a company, 90% of the restructuring involves the entrepreneur. If he doesn’t believe in the plan, if he doesn’t think that you have correctly identified the source of the problem or that you have the expertise to help him, he will not buy into the plan. As consultants, we don’t have the decision-making power in the company. If he doesn’t buy in, we cannot force him.
MARCHAND: Exactly. It was a tough discussion, but I thought at the time that it was the only way to get through to him. His initial knee-jerk reaction was anger, because the decisions he had to make were tough for him. But after sleeping on it, he was wise enough to think things through. He came back to the table and said, “I prefer to save my company rather than keep my luxury cars.” One of my key points was that if he saved his company today, he could very well be profitable enough to buy two new cars in the future.
MARCHAND: … you have to make the changes. So that’s the challenge in a midmarket file because it’s often managed by an entrepreneur who brought the business to that level and wants to save the company. But they have to be willing to make the changes themselves.
Another good example was a large file a few years after, in 2013. My client was a financial institution in Quebec. They had a critical U.S. supplier, a technology company, that was insolvent. My firm was retained to advise them on what they should do. They didn’t want to lose their control over the technology, but they didn’t know how to address the situation.
Our recommendation was to purchase the assets. We told them the supplier was in Chapter 11, so they could purchase the asset and incorporate the technology into their existing technology over time. After that recommendation, they asked me to be part of the due diligence team to review all aspects of the file to determine what had to be done to incorporate those assets into a financial institution and to integrate a commercial business into it.
I started with the financial due diligence responsibility on the team, but in reviewing some aspects the file, I was asking questions: “What is the financial impact of this, and what is the financial impact of that?” After only a few weeks, my client said, “You’re asking so many questions that we never thought about. I think you should be the project manager from now on and oversee all the aspects of the file to make sure that we don’t drop the ball on this.” I was promoted to project manager, basically, for asking too many questions!
That file lasted eight months and involved travel between Montreal; Dallas; Irvine, California; and Washington. I was traveling two weeks out of three to oversee the team and make sure that a new company was set up in the U.S. owned by my Canadian client; that the asset purchase under Chapter 11 was realized; that the accounting, payroll, and all the other requirements were set up in that new company; and more importantly, that all the technology was incorporated into my client’s technology infrastructure.
The challenge was that there were millions of end users. My client didn’t want any service interruption. When we arrived at D-Day and we flipped the switch, nothing bad happened. It was seamless for the users, so my client was ecstatic about that. It was a big accomplishment and success for me.
MARCHAND: No, I had the opportunity to do another cross-border file involving a company that manufactured automotive parts. They had one manufacturing plant in Montreal and another in Florida. It was a filing in Canada, and a Chapter 15 was filed in the U.S. for the recognition of the Canadian procedure. I worked very well with the team in the U.S.
MARCHAND: The major difference between the two systems is the management of the file in Canada. Here, the file is mainly managed by the trustee or the consultant that will report to the court, be involved in the company, and do the majority of the restructuring. My feeling is that in the U.S., the attorney has a larger role in managing the file than the consultant.
But what has to be done in the company to make the change is done by a consultant. A lawyer will maybe drive more of the steps of the file, but we still have to do the legwork. We have to go into the company to make the change. That remains the same between the two countries.
MARCHAND: My work with Videotron, the cable company, and National Bank of Canada gave me a lot of experience dealing with internal changes. I was involved both as an employee and as the one managing the changes. That experience, to not just recommend change but to be on the team implementing the change and to feel the effects and consequences of the changes, both as an employee and management, was important for me. When I make recommendations to my clients, I know and understand their reality and what they will have to go through to be successful in the restructuring. I think that’s a big factor in making me the professional I am today.
Another key milestone was coming to MNP, Canada’s fifth-largest national accounting firm. A few years ago, they decided to come to Quebec, and I wanted to join a firm that was poised for growth and that wanted an entrepreneur to join in and help grow the market. I joined the firm four years ago, and I’ve been a partner for two years now. That’s another key milestone of my career.
MARCHAND: TMA is a great place to connect with other professionals and to grow our network. As professionals, we are all good and competent in our fields. But to have a good relationship with your peers and to know the key players in your market is important, because when you arrive in the file and you have to deal with other professionals, that personal contact that you developed at TMA events is a great advantage. Even though you may not be on the same side of the fence, you know each other because of the contact you’ve made at TMA events and that helps discussions significantly.
I would add that having the chance to connect with other professionals is also important for business development. When a file comes up, a TMA member will think more readily of a fellow member. It’s another important aspect of TMA events.
MARCHAND: They have to be prepared to work hard because when a difficult situation arises in a company, it’s always critical. The beginning of a file requires high levels of involvement by the professionals. You have to be ready to roll up your sleeves and move into action quickly.
In the midmarket space, you have to be prepared to work in an imprecise environment. Entrepreneurs in the field do not always have the ability to provide rigorous information and precise data. You have to be prepared to work hard to get to the bottom of things and to capture the essence of the problem quickly, to be able to see past the symptom to address the problem. When you address the root of the problem, you will save the patient, not just put on a Band-Aid.
MARCHAND: I really love ice hockey. I still play twice a week during the winter season, and I keep playing once a week in the summertime because I love it. When I was younger, I had the opportunity to play in some tournaments and even win some of them. I can say that once in my life I made money with hockey. I was never good enough to make a living from it, but I enjoy it, and I want to continue to play as long as I can.
I have four boys who are now 16, 14, 12, and 10, and I would like to play long enough to have them play in my garage league and have fun with them when I’m older.
During the summer, we like to camp. We travel from one campground to another, so we have a chance to see different places. Sometimes we are near a beach. Sometimes we are near a lake, a river, a mountain, or a national park. It’s a great way to enjoy the summer with the family.
MARCHAND: We just started. Last year, my 16-year-old son discovered a passion for triathlons. We supported him last summer, but it seemed to be a lot of fun and good way of living and to train on a regular basis in different sports—swimming, running, and biking. My other kids were inspired by him and started triathlon training, too, so my wife and I decided to join them. Since February, we’ve been training for the triathlon season that will begin in a few weeks here. We are planning to participate in our first triathlon in mid-June, and we have a few more planned for the summer.
My oldest has already moved to the elite level. He’s really passionate and trains on a regular basis. We’ll do at least four this summer to follow his competition calendar.
MARCHAND: I think what surprises people most is that I’m the father of four boys with my wife, who I’ve been with for the last 18 years. The boys all play hockey, and I try to coach them in different years, so one year I will coach one and the next year, another. I’m really involved in their hockey season and with their teams.
You can imagine that the winter season is very busy for us, and my wife and I must really work as a team to be able to go to all the practices, games, and tournaments. It’s hectic, but we love it.
MARCHAND: It is, not to mention that we also have to include some time for both of our careers in that schedule, too! But we make it work.