Q: How did you gravitate into turnaround and restructuring work?
Pabst: I got into the business in 1995 as CFO at Hilco. Hilco needed a CFO, and the owner pursued me for the better part of a year. The company that I had worked with previously was highly leveraged. I spent the better part of 10 years working out of that situation, so I had some familiarity with what it was like to be restructured, if you will.
Once I was in the business, for me it was always an intoxicating environment. There were always new transactions going on. Coming from a business where day-to-day operations were pretty consistent, this space always provides for something new. When I got in, I was hooked.
Q: You started your own firm somewhere along the line.
Pabst: I started HYPERAMS in 2010 along with a partner who agreed to provide seed funding. I spent five years at what was then known as Hilco/Great American. When the firms split, I ultimately ended up with Great American separately for about 10 years. So, I spent 15 years in a larger environment. I always wanted to try to run my own shop and ultimately got that opportunity.
Q: When you started the business, what was your vision? How large did you envision the firm becoming? You have 25 people working there now, right?
Pabst: We do. I’m not sure I really thought about it in those terms. My plan for the business then looks nothing like what the business has evolved into. While I am a significant planner by nature, this business has not turned out anything like I planned. I didn’t know if it was going to be me doing liquidation work by myself with my partner or whether the firm was going to morph into something bigger. It just evolved over time.
When I started the business, I only wanted to buy assets and resell them. I didn’t want to be in the appraisal business or fee-for-service work environment. But if you look at the business today, you’ll find that the business model is dramatically different.
Our appraisal business has grown to be a significant part of the company, which is a discipline I never included in my original business plan. But when I started having payroll to meet and banks called and asked, “Can you do an appraisal?” I thought, “I don’t want to be in this business necessarily, but it’ll start putting some cash in the bank.” Suddenly, the business started to morph. We have a rapidly growing appraisal practice now and are accepted by most of the major financial institutions in the country. That’s really helped evolve the company as an accepted service provider in the industry.
On the liquidation side of the business, we’ve developed more into a relationship company, as opposed to a company that just pays the most for an asset and resells it. The business is nothing like what I thought it was going to be, let’s put it that way. I had no illusions or grand plans of growing a large practice. I’ve been in a larger firm; I really have enjoyed being in generally a smaller, albeit growing, environment.
Q: What have been some of your favorite or most gratifying deals along the way?
Pabst: There have been a lot over the years, but with this firm, a couple really stood out. Based on a relationship I had from a prior life, I was able to become an advisor to Hudson’s Bay Company in Canada when they shut down their Zellers division and sold all the real estate to Target. If you’re not familiar with Canada, Zellers was like the original Wal-Mart of Canada, if you will.
Target was looking for an entry into the Canadian market. They paid Zellers a really big number for their real estate, so Zellers had to wind down their portfolio of stores. They engaged us to help them understand what a liquidation would look like and to assist them in bidding out the larger liquidation firms and then monitor the liquidation sales over an 18-month period on their behalf. The relationship went from that initial advisory work to handling some store closings for other divisions that they shut down as well as the sale of racking and support assets in four distribution centers that they closed.
That was the first significant transaction they we did at HYPERAMS. While I don’t know that it was necessarily a driver of getting business here in the States, it certainly put the firm on much more established financial footing. That was a milestone transaction for us.
We also have a relationship with a large private equity fund in New York. They specialize in buying underperforming businesses, frequently with a change of footprint in mind. We do a large portion, if not all, of their plant and asset sales. I’ve known the team who started the fund since they were with another PE firm, where we did work on their behalf as well. It’s that kind of repeat business that epitomizes our firm. They trust us, and we provide solutions to their excess asset situations, whether they’re full-plant solutions or just a grouping of miscellaneous assets that are no longer being utilized in current operations.
The relationship with the founders of that firm, and others like it, have been a key to how we’ve been able to grow our business—and demonstrates how we treat people.
Q: What other key milestones in your career have helped make you the professional you are today?
Pabst: Oddly enough, my time in public accounting provided a training base in terms of how to manage people, how to direct people, and how to lead people that has just been invaluable in my career. I think that it was a period in an industry that I knew I didn't want to be in long term, but the experience that I had there has proven to be invaluable.
After that, I worked at a company called JG Industries, a retail holding company that owned five different retailers, including Goldblatt’s in Chicago. As I mentioned, it was a highly leveraged business. We had to put one of the subsidiaries through a bankruptcy filing. We infused cash into another of the subsidiaries through a public offering. What’s the old saying, either go bankrupt or go public? Two other subsidiaries were sold, so I got to be actively involved in the marketing and sale of two businesses.
Then, as time evolved, I got my first role as an operational lead and an operational director as the chief operating officer for Goldblatt’s, which at the time was a 16-store discount chain. That was an 18-month to two-year experience that was invaluable and helped me bridge the gap from being a “financial guy” to becoming somebody who understands how to run a business. I didn’t know it at the time, but when I look back, the things we went through really prepared me for the business and the industry that I’m in now.
The other milestone in my career was when I separated from Great American. Leaving that firm gave me the impetus to start HYPERAMS and run my own firm. The last four or five years that I was there, I was always feeling like I had the ability to run my own business in this industry. Leaving them finally gave me the impetus to make the move and do something about that. I’ll be forever indebted to my partner Greg Yurovsky at Hyper Microsystems, who put up the seed capital to start this business. He’s been repaid many times over for the minimal investment he ultimately made, but the faith he put in me and my ability to start something was extremely humbling.
Q: What role has your TMA membership played in your career?
Pabst: It’s been large, to be honest. About two years after we started HYPERAMS, I looked back on the number of transactions that we had done. Outside of the Hudson's Bay engagement, there was a correlation, direct or indirect, that 75% of our business during that start-up period came through a TMA-developed relationship or an introduction that somebody that I knew through TMA had made to me. It’s the power of the TMA network and the power of working within TMA as well that I think put me in a position to be successful.
People who knew me through TMA—advisors and others—knew that I tried to do the right thing by my clients and was honest in how I conducted business. Frankly, I wasn’t a sales guy; I was an ops guy and an admin guy. If I got a business opportunity at one of the larger firms, generally speaking I threw it over the transom to one of the business development people to work. So, it was a scary proposition when I did start the firm in terms of whether I could make that transition. Frankly, it was the network of people in TMA or individuals who were connected with people in TMA who gave me and us the ability to have put the firm in a position to succeed.
Q: You built a good base and reputation in TMA. You were very active. Can you talk about that a little bit?
Pabst: I was active in the Chicago/Midwest Chapter. I started with committee roles. I worked up through other roles and ultimately was president-elect and became president in Chicago in 2010. Those relationships, many of which I have until this day, have been invaluable. It was after my time as chapter president in Chicago that we started HYPERAMS. I moved on and started to get active at TMA Global as well. I managed some committee positions, and then I was VP of Finance. I served in that role for two years and ran for president of TMA Global.
I was active at the board level for years, both globally and locally. The relationships that I made, both locally and throughout the country, have continued to serve the firm well. The ability of other people in the industry to see how you operate in TMA, I believe, has a huge bearing on whether they want to work with you. If you’re a committee member who’s not going to be active in supporting the committee, or if you’re a board member who just goes through the motions and dials it in—doesn’t read the materials and ask questions—in my opinion, people see and understand that. The one thing I was never hesitant to do was respectfully state my opinion. I was always prepared. I think in general that only enhances the respect people in the industry have for me as well as the firm.
Now it’s carried on. Kat Parker, our director of business development and sales at HYPERAMS, is the president-elect for next year and will be the president of the Chicago/Midwest Chapter in 2023. I couldn’t be prouder of what she’s accomplished in her career. I believe she carries the same ethics and moral compass that I do and that the firm does. I think that’s important and has been so important in the firm earning the trust of bankruptcy attorneys and advisors.
Q: What advice would you have for someone who’s new to the industry or was thinking about getting into it?
Pabst: I find the whole industry fascinating. I just interviewed somebody this morning who said that when he was selling for a precision machinery company, it might take two years to get from the concept to final completion of a project. Our business is generally much more fast-paced. There’s not a lot of time to waste. Things frequently move quickly, and nothing is the same. With every transaction we work on, there are many similarities but there are also nuances in each one.
There’s an old saying in Chicago: If you don’t like the weather today, wait until tomorrow. It’s kind of the same way for me in this business, which is why I think that many of the people who gravitate to it like it. If people like variety in their work life, once they get into this industry, they find it difficult to leave. I would tell anyone who was contemplating it, if you’re looking for that sort of an environment, I think it’s a great place to build a unique career.
In terms of how to take advantage of TMA, get involved early and often. Join a committee and work the committee. Those relationships that you develop doing committee work, if you really do the work, lay the groundwork for better relationships in the industry and more opportunities to network closely with a diverse group of people in the industry. I think that actively helps the organization and promotes the turnaround community in general.
Q: What are you passionate about outside the office?
Pabst: That’s evolving. I can’t do some of the things that I used to do, but I now have four grandchildren. I’m enjoying watching them grow and spending time with them. We love our lake house, just for the pure relaxation it offers, and it is a family gathering place. I love that. We spend a lot of time there in the summer. Although my game hasn’t evolved with my passion for the game, I still like to play golf as often as I can.
I was an adamant supporter of the Blackhawks—we’ve been season ticket holders since the year before they won their first Stanley Cup. It’s been a little more challenging to watch the Hawks this year for a variety of reasons, but I would still say that has been one of my favorite things to do when I look back over the last 10 years.
Twenty years ago, I would have said my passion was watching my kids play sports, whether it be football or hockey or baseball or cheerleading. I loved doing all of that, and I tried to get to as much of it as I could. Who knows? Now maybe it will evolve into me getting to watch my grandchildren play sports. Maybe that’s the next phase.
Q: What might people who only know you professionally be most surprised to learn about you?
Pabst: If you look at my resume in starting my business and my comments about liking the variety, I historically have never been big on change in my life—at least that’s what my wife and my family tell me. When I look at my evolution in my career and in the industry, I’m not sure that a lot of people in the industry would say that.
I met my wife just after graduating from high school, and we have not looked back. Our first date was a Ted Nugent concert that I found tickets to on the street. I used to cut lawns for a living in the summer, and I literally found four tickets in a Ticketmaster envelope that someone had lost, and it gave me the nerve to ask her to go out finally.
I feel extremely proud that I have three children, all of whom are out of the house, all of whom have their own houses, and all of whom are off the payroll. They all have families. Sue has been an amazing backstop for me for many years when I wasn’t around as much as I should have been. It’s a testament to her and I guess to our relationship as well that all the kids have ended up where they are.
Q: Anything you’d like to add?
Pabst: Thanks for letting me participate in this interview. It’s always interesting to reflect on how things have evolved over the years. I would also like to say a quick thanks to all of those who have joined the firm over the years—it’s not easy to decide to join a business in its infancy. Gene Arenson was my first hire, followed by Kat Parker, and, of course, there’s our Director of Appraisal Services Jonathan Deptula. They took the biggest risks with me, and I will be forever grateful and hoping they have felt it has been worth the ride.